[Federal Register Volume 77, Number 123 (Tuesday, June 26, 2012)]
[Proposed Rules]
[Pages 38148-38169]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-15537]
[[Page 38147]]
Vol. 77
Tuesday,
No. 123
June 26, 2012
Part II
Department of the Treasury
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Internal Revenue Service
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26 CFR Part 1
Additional Requirements for Charitable Hospitals; Proposed Rule
Federal Register / Vol. 77 , No. 123 / Tuesday, June 26, 2012 /
Proposed Rules
[[Page 38148]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-130266-11]
RIN 1545-BK57
Additional Requirements for Charitable Hospitals
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document contains proposed regulations that provide
guidance regarding the requirements for charitable hospital
organizations relating to financial assistance and emergency medical
care policies, charges for certain care provided to individuals
eligible for financial assistance, and billing and collections. The
regulations reflect changes to the law made by the Patient Protection
and Affordable Care Act of 2010. The regulations will affect charitable
hospital organizations.
DATES: Comments and requests for a public hearing must be received by
September 24, 2012.
ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-130266-11), room
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand-delivered Monday through
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
130266-11), Courier's Desk, Internal Revenue Service, 1111 Constitution
Avenue NW., Washington, DC, or sent electronically via the Federal
eRulemaking Portal at http://www.regulations.gov (IRS REG-130266-11).
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
Amber L. Mackenzie or Preston J. Quesenberry at (202) 622-6070;
concerning submissions of comments and requests for a public hearing,
Oluwafunmilayo Taylor at (202) 622-7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained in this notice of proposed
rulemaking has been submitted to the Office of Management and Budget
for review and approval under 1545-0047, in accordance with the
Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). Comments on the
collection of information should be sent to the Office of Management
and Budget, Attn: Desk Officer for the Department of the Treasury,
Office of Information and Regulatory Affairs, Washington, DC 20503,
with copies to the Internal Revenue Service, Attn: IRS Reports
Clearance Officer, SE:W:CAR:MP:T:T:SP, Washington, DC 20224. Comments
on the collection of information should be received by August 27, 2012.
Comments are specifically requested concerning:
Whether the proposed collection of information is necessary for the
proper performance of the functions of the Internal Revenue Service,
including whether the information will have practical utility;
The accuracy of the estimated burden associated with the proposed
collection of information;
How the quality, utility, and clarity of the information to be
collected may be enhanced;
How the burden of complying with the proposed collection of
information may be minimized, including through forms of information
technology; and
Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
The collection of information in the proposed regulations is in
Sec. Sec. 1.501(r)-4 and 501(r)-6(c). The collection of information
flows from section 501(r)(4) of the Internal Revenue Code (Code), which
requires hospital organizations to establish a written financial
assistance policy and a written policy related to care for emergency
medical conditions, and section 501(r)(6), which requires a hospital
organization to make reasonable efforts to determine whether an
individual is eligible for assistance under a financial assistance
policy before engaging in extraordinary collection actions against that
individual. The expected recordkeepers are hospital organizations
described in sections 501(c)(3) and 501(r)(2).
Estimated number of recordkeepers: 3,377.
Estimated average annual burden hours per recordkeeper: 11.5 hours.
Estimated total annual recordkeeping burden: 38,836.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a valid
control number assigned by the Office of Management and Budget.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
return information are confidential, as required by 26 U.S.C. 6103.
Background
The Patient Protection and Affordable Care Act, Public Law 111-148
(124 Stat. 119 (2010)) (the Affordable Care Act), enacted section
501(r) of the Code, which adds requirements for hospital organizations
that are (or seek to be) recognized as described in section 501(c)(3).
Section 501(r)(1) of the Code states that an organization described in
section 501(r)(2) (a hospital organization) will not be treated as
described in section 501(c)(3) unless the organization meets the
requirements described in section 501(r)(3) through 501(r)(6). The
Affordable Care Act did not otherwise affect the substantive standards
for tax exemption that hospital organizations are required to meet
under section 501(c)(3).
Section 501(r)(2)(A) defines a hospital organization as: (i) An
organization that operates a facility required by a state to be
licensed, registered, or similarly recognized as a hospital; and (ii)
any other organization that the Secretary determines has the provision
of hospital care as its principal function or purpose constituting the
basis for its exemption under section 501(c)(3).
Section 501(r)(2)(B)(i) requires a hospital organization that
operates more than one hospital facility to meet the requirements of
section 501(r) separately with respect to each hospital facility.
Section 501(r)(2)(B)(ii) provides that a hospital organization will not
be treated as described in section 501(c)(3) with respect to any
hospital facility for which the requirements of section 501(r) are not
separately met.
Community Health Needs Assessments
Section 501(r)(3) requires a hospital organization to conduct a
community health needs assessment (CHNA) at least once every three
years and adopt an implementation strategy to meet the community health
needs identified through the CHNA. The CHNA must take into account
input from persons who represent the broad interests of the community
served by the hospital facility, including those with special knowledge
of or expertise in public health. In addition, the CHNA must be made
widely available to the public.
Financial Assistance Policy and Emergency Medical Care Policy
Section 501(r)(4) requires a hospital organization to establish a
written financial assistance policy (FAP) and a written policy relating
to emergency medical care.
The FAP must include: (1) Eligibility criteria for financial
assistance, and whether such assistance includes free or
[[Page 38149]]
discounted care; (2) the basis for calculating amounts charged to
patients; (3) the method for applying for financial assistance; (4) in
the case of an organization that does not have a separate billing and
collections policy, the actions the hospital organization may take in
the event of nonpayment; and (5) measures to widely publicize the FAP
within the community to be served by the hospital organization.
The emergency medical care policy must require the hospital
organization to provide, without discrimination, care for emergency
medical conditions (within the meaning of the Emergency Medical
Treatment and Labor Act (EMTALA), section 1867 of the Social Security
Act (42 U.S.C. 1395dd)) to individuals regardless of their eligibility
under the organization's FAP.
Limitation on Charges
Section 501(r)(5)(A) requires a hospital organization to limit
amounts charged for emergency or other medically necessary care
provided to individuals eligible for assistance under the
organization's FAP (FAP-eligible individuals) to not more than the
amounts generally billed to individuals who have insurance covering
such care (AGB). Section 501(r)(5)(B) prohibits the use of gross
charges.
Billing and Collections
Section 501(r)(6) requires a hospital organization to make
reasonable efforts to determine whether an individual is FAP-eligible
before engaging in extraordinary collection actions (ECAs) against the
individual.
Notice 2010-39
In June 2010, the Department of Treasury (Treasury Department) and
the Internal Revenue Service (IRS) issued Notice 2010-39 (2010-24 IRB
756 (May 27, 2010)), which solicited comments regarding the application
of the additional requirements imposed by section 501(r). The Treasury
Department and the IRS received approximately 125 comments in response
to Notice 2010-39. The principal comments considered in drafting these
proposed regulations are discussed in this preamble under Explanation
of Provisions.
Notice 2011-52
In July 2011, the Treasury Department and the IRS issued Notice
2011-52 (2011-30 IRB 60 (July 8, 2011)), which addressed the CHNA
requirements described in section 501(r)(3). Notice 2011-52 described
specific provisions related to the CHNA requirements that the Treasury
Department and the IRS anticipate will be included in regulations to be
proposed under section 501(r) and solicited comments from the public.
The comment period for Notice 2011-52 closed on September 23, 2011. The
Treasury Department and the IRS received more than 80 comments in
response to Notice 2011-52.
Hospital organizations may rely on the guidance in Notice 2011-52
with respect to any CHNA made widely available to the public, and any
implementation strategy adopted, on or before the date that is six
months after the date further guidance regarding the CHNA requirements
is issued.
Explanation of Provisions
These proposed regulations provide guidance on the requirements
described in section 501(r)(4) through 501(r)(6) of the Code. Sections
501(r)(4), 501(r)(5), and 501(r)(6) all relate to a hospital facility's
FAP or to individuals who are, or may be, FAP-eligible. The proposed
regulations under section 501(r)(4) describe the information that a
hospital facility must include in its FAP and the methods a hospital
facility must use to widely publicize its FAP. They also describe what
a hospital facility must include in its emergency medical care policy.
The proposed regulations under section 501(r)(5) describe how a
hospital facility determines the maximum amounts (that is, the amounts
generally billed to individuals who have insurance coverage, or AGB) it
can charge FAP-eligible individuals for emergency and other medically
necessary care. In the case of an individual who is FAP-eligible but
has not applied for financial assistance at the time charges are made,
the proposed regulations provide that a hospital facility will not fail
to satisfy section 501(r)(5) if it charges the individual more than
AGB, provided the hospital facility is complying with all the
requirements regarding notifying individuals about the FAP and
responding to applications submitted, including correcting the amount
charged and seeking to reverse any ECA previously initiated if an
individual is later found to be FAP-eligible.
The proposed regulations under section 501(r)(6) describe the
actions that are considered ``extraordinary collection actions'' and
the ``reasonable efforts'' a hospital facility must make to determine
FAP-eligibility before engaging in such actions. In general, to have
made reasonable efforts under the proposed regulations, a hospital
facility must determine whether an individual is FAP-eligible or
provide required notices during a notification period ending 120 days
after the date of the first billing statement. Although a hospital
facility may undertake extraordinary collection actions after this 120-
day notification period, a hospital facility that has not determined
whether an individual is FAP-eligible must still accept and process a
FAP application from the individual for an additional 120 days.
Accordingly, the total period during which a hospital facility must
accept and process FAP applications is 240 days from the date of the
first billing statement. If a hospital facility receives a FAP
application during the application period, it must suspend any ECAs it
has started until it has processed the application and, if it
determines the individual is FAP-eligible, must seek to reverse the
ECAs and promptly refund any overpaid amounts. While debts may be
referred to third parties to assist with collection actions at any
time, including during the initial 120-day notification period, they
may not be sold to third parties during the notification period unless
and until an eligibility determination has been made.
These proposed regulations also provide guidance on which entities
must meet the requirements described in section 501(r)(4) through
501(r)(6). In particular, the proposed regulations contain a
definitions section that defines ``hospital organization,'' ``hospital
facility,'' and other key terms used in the regulations.
In crafting proposed regulations to implement these interrelated
statutory provisions, the Treasury Department and the IRS sought to
ensure that patients who may require financial assistance--and the
patient advocacy groups that assist them--will have access to the
information about a hospital facility's FAP that the patients need in
order to effectively seek financial assistance under the FAP. The
Treasury Department and the IRS also sought to preserve hospital
facilities' flexibility to determine the best way to meet the
particular health needs of the specific communities they serve. Neither
the statute nor these proposed regulations establish specific
eligibility criteria that a FAP must contain. Moreover, aside from
prohibiting hospital facilities from charging FAP-eligible individuals
more than AGB, neither the statute nor the proposed regulations dictate
the amounts or kinds of financial assistance that a FAP must provide.
As discussed further in this Explanation of Provisions, these
proposed regulations do not provide guidance on the CHNA requirements
described in section 501(r)(3) or on the consequences described in
sections
[[Page 38150]]
501(r)(1) and 501(r)(2)(B) for failing to satisfy the section 501(r)
requirements. The Treasury Department and the IRS intend to issue
additional proposed regulations addressing the CHNA requirements and
the consequences for failing to satisfy the section 501(r) requirements
and responding to the comments received in response to Notice 2011-52.
1. Hospital Facilities and Organizations
a. Hospital Facilities
Because section 501(r)(2)(B) requires a hospital organization to
satisfy the requirements of section 501(r) separately with respect to
each hospital facility it operates, a number of commenters requested a
definition of ``hospital facility.'' In accordance with section
501(r)(2)(A)(i), the proposed regulations define a hospital facility as
a facility that is required by a state to be licensed, registered, or
similarly recognized as a hospital. Except as otherwise provided in
future published guidance, a hospital organization may treat multiple
buildings operated under a single state license as a single hospital
facility. Future published guidance also will address whether a
hospital organization's operations in a single building under more than
one state license are treated as one or multiple hospital facilities.
The proposed regulations refer to hospital facilities taking
certain actions. Such references are intended to include instances in
which the hospital organization operating the hospital facility takes
action through, or on behalf of, the hospital facility.
b. Hospital Organizations
In accordance with section 501(r)(2)(A)(i), the proposed
regulations provide that a hospital organization includes any
organization recognized (or seeking to be recognized) as described in
section 501(c)(3) that operates one or more hospital facilities.
Section 501(r)(2)(A)(ii) provides that a hospital organization also
includes any other organization that the Secretary determines has the
provision of hospital care as its principal function or purpose
constituting the basis for its exemption under section 501(c)(3). These
proposed regulations do not include a determination that any other
categories of organizations or facilities have the provision of
hospital care as their principal function or purpose, but comments are
requested regarding whether additional organizations should be
included. Moreover, the Treasury Department and the IRS intend that any
future regulations regarding any such categories of organizations or
facilities will apply only prospectively, after an opportunity for
notice and comment. Prior to the effective date of any such future
regulations, only organizations operating a facility required by a
state to be licensed, registered, or similarly recognized as a hospital
will be considered ``hospital organizations'' that must satisfy the
requirements under section 501(r).
c. Hospital Facilities Located Outside of the United States
A number of commenters asked whether section 501(r) will apply to
an organization as a result of its operating a hospital facility
located outside of the United States. The proposed regulations provide
that, for purposes of determining whether a facility is required by a
state to be licensed, registered, or similarly recognized as a
hospital, the term ``state'' includes only the 50 states and the
District of Columbia, and not any U.S. territory or foreign country. As
a result, a facility located outside of the United States will not be
considered a hospital facility under these proposed regulations. Thus,
pending any future guidance regarding other categories of hospital
organizations or facilities, a hospital organization operating a
facility located outside of the United States that is not required to
be licensed by any State will not be required to meet the section
501(r) requirements with respect to that facility and an organization
will not be considered a hospital organization as a result of operating
such a facility.
d. Operating Hospital Facilities Through Partnerships or Disregarded
Entities
Notice 2011-52 notes that the Treasury Department and the IRS
intend to include within the definition of ``hospital organization''
any organization described in section 501(c)(3) that operates a
hospital facility through a disregarded entity, or a joint venture,
limited liability company, or other entity treated as a partnership for
federal tax purposes. Notice 2011-52 also requested comments regarding
whether (or under what circumstances) an organization should not be
considered to ``operate'' a hospital facility for purposes of section
501(r) as a result of its owning a small interest (other than a general
partner or similar interest) in an entity treated as a partnership for
federal tax purposes that operates the hospital facility.
The proposed regulations provide that a hospital organization
includes any organization that operates a hospital facility through a
disregarded entity. The Treasury Department and the IRS are considering
the comments received in response to Notice 2011-52 regarding the
operation of hospital facilities through partnerships and will address
this issue in separate guidance.
e. Government Hospital Organizations
A number of commenters requested that the Treasury Department and
the IRS provide an exception from the requirements imposed by section
501(r) for certain government hospital organizations. For example, some
commenters suggested that the requirements of section 501(r) should not
apply to a hospital organization that excludes its income from gross
income under section 115 but has nonetheless applied for and received
recognition as an organization described in section 501(c)(3). Other
commenters suggested that the section 501(r) requirements should not
apply to any hospital organization that is a governmental unit or an
affiliate of a governmental unit as described in Rev. Proc. 95-48
(1995-2 CB 418) (relieving such organizations from the annual filing
requirement under section 6033).
The statutory language of section 501(r) applies to all hospital
organizations that are (or seek to be) recognized as described in
section 501(c)(3). Section 501(r) does not explicitly address
government hospital organizations, nor does it include a specific
exception for government hospital organizations. Accordingly, as
indicated in Notice 2011-52, the Treasury Department and the IRS intend
to apply section 501(r) to every hospital organization that has been
recognized (or seeks recognition) as an organization described in
section 501(c)(3). As a result, the proposed regulations do not contain
any exceptions or special rules for government hospital organizations
and are intended to apply to any government hospital organization
recognized as described in section 501(c)(3). However, in recognition
of the unique position of government hospitals, the Treasury Department
and the IRS request comments regarding alternative methods a government
hospital may use to satisfy the requirements of section 501(r)(4)
through 501(r)(6).
2. Failures To Satisfy the Requirements of Section 501(r)
Numerous commenters requested guidance on the consequences of
failing to meet one or more of the requirements of section 501(r). The
Treasury Department and the IRS are continuing to consider comments
regarding the consequences of failing to meet the
[[Page 38151]]
requirements of section 501(r) and will address this issue in separate
guidance.
3. Community Health Needs Assessments
As described in the Background section of this preamble, the
comment period for Notice 2011-52, which solicited comments on
anticipated regulatory provisions regarding the CHNA requirements,
closed on September 23, 2011. The Treasury Department and the IRS are
considering the comments received in response to Notice 2011-52 and
will address the CHNA requirements in separate guidance. Accordingly,
these proposed regulations do not provide further guidance regarding
the CHNA requirements. Hospital organizations may continue to rely on
the anticipated regulatory provisions described in Notice 2011-52 with
respect to any CHNA made widely available to the public, and any
implementation strategy adopted, until six months after the date
further guidance regarding the CHNA requirements is issued.
4. Financial Assistance Policies and Emergency Medical Care Policies
In accordance with the statute, the proposed regulations require
hospital organizations to establish written FAPs as well as written
emergency medical care policies.
a. Financial Assistance Policies
The proposed regulations provide that a hospital organization meets
the requirements of section 501(r)(4)(A) with respect to a hospital
facility it operates if the hospital organization establishes for that
hospital facility a written FAP that applies to, at a minimum, all
emergency and other medically necessary care provided by the hospital
facility.
In general, a hospital facility's FAP must include: (1) Eligibility
criteria for financial assistance, and whether such assistance includes
free or discounted care; (2) the basis for calculating amounts charged
to patients; (3) the method for applying for financial assistance; (4)
in the case of an organization that does not have a separate billing
and collections policy, the actions the organization may take in the
event of nonpayment; and (5) measures to widely publicize the FAP
within the community served by the hospital facility.
While the FAP itself must generally include each of these items of
information and must be made available on a Web site and without charge
upon request in public locations in the hospital facility and by mail,
the proposed regulations otherwise permit a hospital facility to widely
publicize its FAP using summaries that do not contain all of the
information in the FAP. In addition, the Treasury Department and the
IRS recognize that certain details related to the FAP are likely to
change regularly and that it may be inefficient in certain
circumstances for a hospital facility to have to update its FAP to
reflect every such change. As a result, the proposed regulations give
hospital facilities the option of providing certain information
separately from the FAP, as long as the FAP explains how members of the
public can readily obtain this information free of charge on a Web site
and in writing.
i. Eligibility Criteria and Basis for Calculating Amounts Charged to
Patients
A few commenters noted that section 501(r)(4) does not appear to
mandate that FAPs contain any particular eligibility criteria and asked
that hospital facilities be given the flexibility to develop FAP
eligibility criteria that respond to local needs. Other commenters
asked the Treasury Department and the IRS to require all FAPs to
include certain minimum eligibility criteria.
Consistent with the statute, the proposed regulations do not
mandate any particular eligibility criteria and require only that a FAP
specify the financial assistance, including all discounts and free
care, available under the FAP and all of the specific eligibility
criteria that an individual must satisfy to receive each such discount,
free care, or other level of assistance. If applicable, a FAP must also
specify the amounts, such as gross charges, to which any discount
percentages specified in the FAP will be applied.
At least one commenter recommended that hospital facilities be
required to consult with members of the community, including
representatives of vulnerable or disadvantaged community members, as
they develop or revise their FAPs. Although the proposed regulations do
not include such a requirement, the Treasury Department and the IRS are
considering the potential link between the needs of a hospital
facility's community, as determined through the hospital facility's
most recent CHNA, and a hospital facility's FAP. Comments are requested
on this issue.
In addition, because section 501(r)(5)(A) requires a hospital
facility to limit amounts charged for emergency or other medically
necessary care provided to FAP-eligible individuals to not more than
the amounts generally billed to individuals who have insurance covering
such care (AGB), the proposed regulations require the FAP to state that
following a determination of FAP-eligibility, an individual will not be
charged more than AGB for emergency or other medically necessary care.
The FAP must also state which of the permitted methods (described
in the section of this preamble on Limitation on Charges) the hospital
facility uses to determine AGB. Finally, if applicable, the FAP must
either state the percentage(s) of gross charges the hospital facility
applies to determine AGB (the AGB percentage(s)) and how these AGB
percentage(s) were calculated or explain how members of the public may
readily obtain this information in writing and free of charge.
ii. Method for Applying for Financial Assistance
Section 501(r)(4)(A)(iii) requires a hospital facility's FAP to
include the method for applying for financial assistance under the FAP.
Accordingly, the proposed regulations require a hospital facility's FAP
to describe how an individual may apply for financial assistance under
the FAP. In addition, either the hospital facility's FAP or FAP
application form (including accompanying instructions) must describe
the information or documentation the hospital facility may require an
individual to submit as part of his or her FAP application and provide
certain contact information that an individual can use to obtain
assistance with the FAP application process. Financial assistance may
not be denied based on the omission of information or documentation if
such information or documentation is not specifically required by the
FAP or FAP application form.
iii. Actions That May Be Taken in the Event of Nonpayment
Section 501(r)(4)(A)(iv) requires a hospital facility that does not
have a separate billing and collections policy to describe in the FAP
the actions the hospital facility may take in the event of nonpayment.
The statute does not define what it means for a hospital facility to
have a separate billing and collections policy. The Treasury Department
and the IRS propose to define the term ``billing and collections
policy'' as a separate written policy that describes the actions a
hospital facility may take in the event of nonpayment in a manner that
would be sufficient to satisfy section 501(r)(4)(A)(iv) if the hospital
facility had chosen to include
[[Page 38152]]
the description in its FAP. The Treasury Department and the IRS also
propose to define the term ``actions a hospital organization may take
in the event of nonpayment'' to include any extraordinary collection
actions described in section 501(r)(6) that a hospital organization may
take only after making reasonable efforts to determine whether an
individual is FAP-eligible.
Accordingly, to implement the requirement under section
501(r)(4)(A)(iv), the proposed regulations require either the FAP, or a
separate written billing and collections policy, to describe the
actions that the hospital facility (or other authorized party) may take
related to obtaining payment of a bill for medical care provided by the
facility, including, but not limited to, any extraordinary collection
actions described in section 501(r)(6). Either the FAP or billing and
collections policy must also describe the process and time frames the
hospital facility (or other authorized party) will use in taking these
actions, including any reasonable efforts to determine whether an
individual is FAP-eligible described in section 501(r)(6). In addition,
the FAP or billing and collections policy must describe the office,
department, committee, or other body with the final authority or
responsibility for determining that the hospital facility has made
reasonable efforts to determine whether an individual is FAP-eligible
and may therefore engage in extraordinary collection actions against
the individual.
In the case of a hospital facility that fulfills these requirements
in a separate written billing and collections policy rather than in the
FAP, the proposed regulations require the hospital facility's FAP to
state that the actions the hospital facility may take in the event of
nonpayment are described in a separate billing and collections policy
and explain how members of the public may readily obtain a free copy of
this separate policy both on a Web site and upon request.
iv. Widely Publicizing the FAP
In accordance with section 501(r)(4)(A)(v), the proposed
regulations require a FAP to include measures to widely publicize the
FAP. One commenter asked that ``widely publicize'' be defined by
example but that it not be defined too narrowly or prescriptively
because hospital facilities need flexibility to address their
particular circumstances. Other commenters recommended requiring use of
one or a combination of the following specific measures to widely
publicize a FAP:
Posting information on the hospital facility's Web site;
Distributing information at the hospital facility's
patient access points;
Notifying patients upon admission;
Distributing information with discharge materials;
Posting information conspicuously in public areas of the
hospital facility (including admissions areas, emergency rooms, waiting
rooms, billing offices, outpatient reception areas, etc.);
Including information with or on billing statements;
Mentioning the FAP when discussing an individual's bill
over the telephone;
Making the FAP available for public inspection and/or
copying without charge at the hospital facility's principal, regional,
and district offices during regular business hours;
Publicizing the FAP to physicians and community health
centers in the community;
Including information regarding the FAP in hospital
newsletters or magazines;
Including information regarding the FAP in appropriate
reports filed with state governments;
Publicizing the FAP through local news media; and/or
Publicizing the FAP through social service agencies.
In addition, several commenters asked that hospital facilities be
allowed to publicize a summary of the FAP instead of the FAP itself.
According to these commenters, summaries of a FAP are often more easily
understood by members of the public. Some commenters also asked that
such summaries of the FAP, or the FAP itself, be translated into
languages spoken by a significant part of the community served by the
hospital facility.
The proposed regulations require a FAP to include four types of
measures that the hospital facility will take to widely publicize the
FAP. Hospital facilities have the option of summarizing these measures
in the FAP itself or explaining in the FAP how members of the public
may readily obtain a free written summary of these measures.
First, the FAP must include measures the hospital facility will
take to make paper copies of the FAP, the FAP application form, and a
plain language summary of the FAP available upon request and without
charge, both for distribution in public locations in the hospital
facility and by mail. Each of these documents must be made available in
English and in the primary language of any populations with limited
proficiency in English that constitute more than 10 percent of the
residents of the community served by the hospital facility. A similar
10 percent threshold is used in certain state laws requiring
notification about financial assistance, as well as certain federal
regulations requiring notices or summaries to be issued in non-English
languages. See, for example, 26 CFR 54.9815-2719T(e)(3); 29 CFR
2520.102-2(c)(2); 45 CFR 147.136(e)(3).
Second, the FAP must include measures the hospital facility will
take to inform and notify visitors to the hospital facility about the
FAP through a conspicuous public display or other measure(s) reasonably
calculated to attract the attention of visitors to the hospital
facility. Such measures could include, for example, conspicuously
posting signs and displaying brochures that provide basic information
about the FAP in public locations in the hospital facility.
Third, the FAP must include measures the hospital facility will
take to inform and notify members of the community served by the
hospital facility about the FAP in a manner reasonably calculated to
reach those members of the community who are most likely to require
financial assistance. Such measures could include, for example, the
distribution of information sheets summarizing the FAP to local public
agencies and nonprofit organizations that address the health needs of
the community's low-income populations.
For purposes of these proposed regulations, ``informing and
notifying'' hospital visitors and community members about a FAP does
not require a hospital facility to provide these individuals with the
FAP or all of the information in the FAP. Rather, provision of a
summary of the FAP or notification of the FAP's existence, combined
with instructions on how to obtain more information about the FAP, will
suffice.
The proposed regulations also make clear that whether a measure is
reasonably calculated to attract visitors' attention or reach members
of the community likely to require financial assistance will depend on
all of the facts and circumstances, including the primary languages
spoken by the residents of the community served by the hospital
facility and other attributes of the community and the hospital
facility.
Finally, the FAP must include measures the hospital facility will
take to make the FAP, FAP application form, and a plain language
summary of the
[[Page 38153]]
FAP widely available on the hospital facility or hospital
organization's Web site or on a Web site established and maintained by
another entity. The hospital facility must conspicuously post complete
and current versions of these documents, both in English and in the
primary language of any populations with limited proficiency in English
that constitute more than 10 percent of the residents of the community
served by the hospital facility.
In addition, any individual with access to the Internet must be
able to access, download, view, and print a hard copy of these
documents, without requiring special computer hardware or software
(other than software that is readily available to members of the public
without payment of any fee) and without payment of a fee to the
hospital facility, hospital organization, or other entity maintaining
the Web site. Finally, the hospital facility or hospital organization
must provide any individual who asks how to access a copy of the FAP,
FAP application form, or plain language summary of the FAP online with
the direct Web site address, or URL, where these documents are posted.
b. Emergency Medical Care Policy
A number of commenters opined that the requirement under section
501(r)(4)(B) that a hospital facility establish an emergency medical
care policy is intended to reflect existing federal law under the
Emergency Medical Treatment and Labor Act (EMTALA) and is not intended
to create any new requirements other than to set forth pre-existing
obligations under federal law in a written policy.
To satisfy the requirements of section 501(r)(4)(B), the proposed
regulations provide that a hospital facility must establish a written
policy that requires the hospital facility to provide, without
discrimination, care for emergency medical conditions (within the
meaning of EMTALA) to individuals, regardless of whether they are FAP-
eligible. The proposed regulations further provide that an emergency
medical care policy will generally satisfy this standard if it requires
the hospital facility to provide the care for any emergency medical
condition that the hospital facility is required to provide under
Subchapter G of Chapter IV of Title 42 of the Code of Federal
Regulations, the chapter regarding the Centers for Medicare and
Medicaid Services' standards and certification and including the
regulations under EMTALA.
Any hospital policy or procedure that discourages individuals from
seeking emergency medical care, such as demanding that emergency
department patients pay before receiving treatment or permitting debt
collection activities in the emergency department, may jeopardize a
hospital facility's compliance with EMTALA and with the requirement
under 501(r)(4)(B) to establish a nondiscriminatory emergency medical
care policy. Accordingly, the proposed regulations provide that unless
a hospital facility's emergency medical care policy prohibits debt
collection activities from occurring in the emergency department or in
other hospital venues where such activities could interfere with the
treatment of emergency medical conditions without discrimination, the
hospital's policy will not meet the requirements of section
501(r)(4)(B).
c. Establishing the FAP and Other Policies
The proposed regulations provide that a hospital organization will
have established a FAP, a separate billing and collections policy, or
an emergency medical care policy for a hospital facility only if an
authorized body of the hospital organization has adopted the policy for
the hospital facility and the hospital facility has implemented the
policy. For these purposes, an authorized body of a hospital
organization means: (1) The hospital organization's governing body
(that is, the board of directors, board of trustees, or equivalent
controlling body); (2) a committee of the governing body that is
permitted under state law to act on behalf of the governing body; or
(3) other parties authorized by the governing body of the hospital
organization to act on its behalf (such as, for example, one or more
executives of the hospital facility), to the extent permitted under
state law. In the case of a hospital facility (operated by a hospital
organization) that is recognized as an entity under state law but is a
disregarded entity for federal tax purposes, an authorized body of the
hospital organization may also include the governing body of that
hospital facility or a committee of, or other parties authorized by,
that governing body, as permitted under state law.
A hospital facility has implemented a policy if it has consistently
carried out the policy.
One commenter asked whether, for purposes of complying with section
501(r)(4), a policy established for a system of multiple hospital
facilities will qualify as a policy for each hospital facility in the
system. The proposed regulations provide that, while a hospital
organization operating multiple hospital facilities must separately
establish a FAP and emergency medical care policy for each hospital
facility it operates, such policies may contain the same operative
terms. The proposed regulations do note, however, that different AGB
percentages and methods of determining AGB and the unique attributes of
a hospital facility or the community it serves could necessitate that
hospital facilities include in their FAPs (or otherwise make available)
different information about AGB or different measures to widely
publicize the FAP. For example, if a hospital organization operates two
hospital facilities, only the first of which serves a community that
includes a population with limited proficiency in English that
constitutes more than 10 percent of the community's residents, only the
first hospital facility must include in its FAP (or otherwise make
available a summary of) measures to widely publicize the FAP in a
language other than English.
5. Limitation on Charges
The proposed regulations provide that a hospital organization meets
the requirements of section 501(r)(5) with respect to a hospital
facility it operates if the hospital facility limits the amount charged
for any emergency or other medically necessary care it provides to a
FAP-eligible individual to not more than the amounts generally billed
to individuals with insurance covering that care (AGB). The proposed
regulations also require a hospital facility to limit the amount
charged for any medical care it provides to a FAP-eligible individual
to less than the gross charges for that care.
a. Amounts Generally Billed
In discussing methods to determine AGB, numerous commenters pointed
to the Joint Committee on Taxation's (JCT) statement in the Technical
Explanation of the Affordable Care Act that ``[i]t is intended that
amounts billed to those who qualify for financial assistance may be
based on either the best, or an average of the three best, negotiated
commercial rates, or Medicare rates.'' Staff of the Joint Committee on
Taxation, Technical Explanation of the Revenue Provisions of the
``Reconciliation Act of 2010,'' as Amended, in Combination with the
``Patient Protection and Affordable Care Act'' (March 21, 2010), at 82
(Technical Explanation). A few commenters recommended requiring
hospital facilities to use Medicare rates in determining AGB, while at
least one commenter requested that hospital facilities not be required
to use Medicare rates. Numerous commenters asked that hospital
facilities be
[[Page 38154]]
permitted to determine AGB by applying an average percentage of gross
charges that commercial insurers and the patients they cover are,
together, expected to pay.
A number of commenters recommended that AGB should be determined at
least annually, and a few commenters asked that AGB be calculated based
on past claims paid by commercial insurers, such as claims paid over
the last six months or over the prior year. In addition, several
commenters asked that hospital facilities be permitted to make separate
AGB determinations for inpatient and outpatient services.
The proposed regulations provide two methods for hospital
facilities to use to determine AGB. The first method is a ``look-back''
method based on actual past claims paid to the hospital facility by
either Medicare fee-for-service only or Medicare fee-for-service
together with all private health insurers paying claims to the hospital
facility (including, in each case, any associated portions of these
claims paid by Medicare beneficiaries or insured individuals).
The Treasury Department and the IRS believe that the three ``best''
commercial rates may be difficult to determine because different
commercial insurers may negotiate the lowest rates for different items
and services. Basing AGB on the claims paid by all private health
insurers and Medicare avoids this difficulty by eliminating the need to
determine which private health insurers have the lowest rates. Although
such an approach allows a hospital facility to include the higher rates
paid by health insurers that are not the lowest (or three lowest), it
also requires the hospital facility to include the rates paid by
Medicare. In addition, basing AGB on the claims paid by all private
health insurers and Medicare is arguably more consistent with the
statutory phrase ``amounts generally billed to individuals who have
insurance'' than basing AGB only on claims paid by those private health
insurers with the lowest, or three lowest, rates. However, the Treasury
Department and the IRS request comments regarding whether hospital
facilities should also have the option of basing AGB on claims paid by
the private health insurer with the lowest rate or by the three private
health insurers with the three lowest rates, and how the lowest rate(s)
should be determined. The Treasury Department and the IRS also request
comments regarding whether hospital facilities should have the option
of basing AGB on claims paid by all private health insurers paying
claims to the hospital facility, without also including claims paid by
Medicare.
The second method for determining AGB is ``prospective,'' in that
it requires the hospital facility to estimate the amount it would be
paid by Medicare and a Medicare beneficiary for the emergency or other
medically necessary care at issue if the FAP-eligible individual were a
Medicare fee-for-service beneficiary. This prospective method is based
only on Medicare because the Treasury Department and the IRS expect
that such a method is only administrable if based on a single insurer's
billing and coding processes. The Treasury Department and the IRS
request comments regarding whether a hospital facility should also have
the option of determining AGB prospectively by estimating the amount
the facility would charge the insured individual and the private health
insurer with the lowest rate (or the insured individuals and three
private health insurers with the three lowest rates).
These two methods of determining AGB are mutually exclusive, and a
hospital facility may use only one method to determine AGB. After
choosing a particular method, a hospital facility must continue to use
that method. The Treasury Department and the IRS request comments on
whether a hospital facility should be allowed to change its method of
calculating AGB under certain circumstances or following a certain
period of time and, if so, under what circumstances or how frequently.
Several commenters asked whether Medicare Advantage should be
included in the determination of AGB. The proposed regulations clarify
that for purposes of determining AGB, amounts paid under ``Medicare''
only include amounts paid under ``Medicare fee-for-service,'' which is
defined as including only Medicare Part A and Part B and excluding
Medicare Advantage (or Medicare Part C). For purposes of the proposed
regulations, claims paid under Medicare Advantage are treated as claims
paid by a private health insurer.
Finally, a number of commenters recommended that in states that
require specific discounts or otherwise control the amount that may be
billed to patients with financial need, those requirements should
establish AGB. Given the wide variation among state laws and the
advantage of uniformity in applying the federal rules, the Treasury
Department and the IRS are proposing to adopt a single federal
regulatory definition of AGB.
i. Look-Back Method
Under the look-back method for determining AGB, a hospital facility
must determine AGB for any emergency or other medically necessary care
provided to a FAP-eligible individual by multiplying the gross charges
for that care by one or more percentages of gross charges, called AGB
percentages. The hospital facility must calculate its AGB percentage(s)
no less frequently than annually by dividing the sum of certain claims
paid to the hospital facility by the sum of the associated gross
charges for those claims. More specifically, these AGB percentages must
be based on all claims that have been paid in full to the hospital
facility for emergency and other medically necessary care by either
Medicare fee-for-service alone or by Medicare fee-for-service and all
private health insurers together as the primary payer(s) of these
claims during a prior 12-month period. For these purposes, a hospital
facility may include in ``all claims that have been paid in full'' both
the portions of the claims paid by Medicare or the private insurer and
the associated portions of the claims paid by Medicare beneficiaries or
insured individuals in the form of co-insurance, copayments, or
deductibles. A hospital facility must begin applying its AGB
percentage(s) by the 45th day after the end of the 12-month period the
hospital facility used in calculating the AGB percentage(s).
The Treasury Department and the IRS request comments regarding this
look-back method generally, and regarding three aspects of this method
in particular. First, comments are requested regarding whether a
hospital facility using the look-back method should have the option to
base its AGB percentage(s) on a representative sample of claims (rather
than all claims) that have been paid in full over a prior 12-month
period. Specifically, comments should address how a hospital facility
would ensure that such samples are representative and reliable. Second,
comments are requested regarding whether a hospital facility needs more
than 45 days between the end of the 12-month period used in calculating
the AGB percentage(s) and the date it must begin applying the AGB
percentage(s). Third, comments are requested regarding whether hospital
facilities might significantly increase their gross charges after
calculating one or more AGB percentages and whether such an increase
could mean that determining AGB by multiplying current gross charges by
an AGB percentage will result in charges that exceed the amounts that
are in fact generally billed
[[Page 38155]]
to those with insurance at the time of the charges. If so, comments are
requested regarding whether safeguards should be implemented to offset
increases in gross charges after the calculation of the AGB
percentage(s), including, for example, requiring AGB to be determined
by applying an AGB percentage not to current gross charges but rather
to current gross charges reduced by any percentage increases in gross
charges since the AGB percentage was last calculated.
As previously noted, numerous commenters asked that hospital
facilities be permitted to determine AGB by applying one average
percentage of gross charges. The proposed regulations provide that a
hospital facility using the look-back method may calculate one average
AGB percentage for all emergency and other medically necessary care
provided by the hospital facility. Alternatively, a hospital facility
may calculate multiple AGB percentages for separate categories of care
(such as inpatient and outpatient care or care provided by different
departments) or for separate items or services, as long as the hospital
facility calculates AGB percentages for all emergency and other
medically necessary care provided by the hospital facility.
ii. Prospective Medicare Method
Under the prospective Medicare method, a hospital facility may
determine AGB for any emergency or other medically necessary care that
the hospital facility provides to a FAP-eligible individual by using
the same billing and coding process the hospital facility would use if
the individual were a Medicare fee-for-service beneficiary. The
hospital facility may then set AGB for that care at the amount the
hospital facility determines would be the amount Medicare and the
Medicare beneficiary together would be expected to pay for the care.
b. Gross Charges
Section 501(r)(5)(B) prohibits the use of gross charges. The
proposed regulations define a gross charge (also known as the
``chargemaster rate'') as a hospital facility's full, established price
for medical care that the hospital facility consistently and uniformly
charges all patients before applying any contractual allowances,
discounts, or deductions.
A number of commenters recommended that section 501(r)(5)(B)'s
prohibition on gross charges should apply only to FAP-eligible
individuals, noting that such an interpretation is consistent with the
JCT's statement in the Technical Explanation that ``[a] hospital
facility may not use gross charges * * * when billing individuals who
qualify for financial assistance.'' Technical Explanation, at 82. The
proposed regulations adopt this recommendation. The proposed
regulations also clarify that the prohibition on the use of gross
charges applies to any medical care, not just emergency and medically
necessary care, provided to a FAP-eligible individual.
Numerous commenters requested that hospital facilities not be
prohibited from including the amount of gross charges on a hospital
bill as an explanatory item or a starting point for itemizing certain
discounts. Commenters stated that this practice is standard in the
healthcare industry and should not be affected by section 501(r)(5)(B).
The proposed regulations make clear that including the gross charges on
hospital bills as the starting point to which various contractual
allowances, discounts, or deductions are applied is permissible, as
long as the gross charges are not the actual amount a FAP-eligible
individual is expected to pay.
c. Safe Harbor for Certain Charges in Excess of AGB
A number of commenters noted that if an individual has yet to
submit a FAP application, a hospital facility will not know at the time
of initial and subsequent billing whether the individual is FAP-
eligible. The proposed regulations provide that whether an individual
is FAP-eligible is determined without regard to whether the individual
has applied for assistance under a hospital facility's FAP. However,
the proposed regulations also provide a safe harbor under which a
hospital facility will not violate section 501(r)(5) if it charges more
than AGB for emergency or other medically necessary care, or charges
gross charges for any medical care, to a FAP-eligible individual who
has not submitted a complete FAP application as of the time of the
charge, as long as the hospital facility made and continues to make
reasonable efforts to determine whether the individual is FAP-eligible
(within the meaning of and during the periods required under section
501(r)(6), including by correcting the amount charged if the individual
is subsequently found to be FAP-eligible). The Treasury Department and
IRS request comments regarding the proposed safe harbor and whether the
patient protections provided in section 1.501(r)-6, including the
requirements that a hospital facility refund amounts overcharged and
seek to reverse previously taken ECAs (except sales of debts) once an
individual has been determined to be FAP-eligible, are sufficient.
6. Billing and Collection
The proposed regulations provide that a hospital organization meets
the requirements of section 501(r)(6) with respect to a hospital
facility it operates if the hospital facility does not engage in ECAs
against an individual before making reasonable efforts to determine
whether the individual is FAP-eligible. For these purposes, a hospital
facility will be considered to have engaged in ECAs against an
individual if the hospital facility engages in ECAs against any other
individual who has accepted or is required to accept responsibility for
the first individual's hospital bills. In addition, a hospital facility
will be considered to have engaged in an ECA against an individual if
any purchaser of the individual's debt or any debt collection agency or
other party to which the hospital facility has referred the
individual's debt has engaged in an ECA against the individual.
a. Extraordinary Collection Actions
In discussing the scope of the term ``extraordinary collection
actions'' (ECAs), many commenters pointed to the JCT's statement in the
Technical Explanation that ``extraordinary collections include
lawsuits, liens on residences, arrests, body attachments, or other
similar collection processes.'' Technical Explanation, at 82. A number
of these commenters argued that ECAs should be limited to the examples
listed in the Technical Explanation, with the term ``other similar
collection processes'' being limited to actions that must be initiated
through a legal or judicial process.
Other commenters recommended that additional actions related to
collections should constitute ECAs or even be prohibited altogether,
including such actions as deferring or denying care based on a pattern
of nonpayment, selling patient debts to third parties, referring debts
to debt collection agencies, charging interest on patient debts, and
any other action beyond sending a patient a bill. A number of
commenters also recommended that reporting to credit agencies should
constitute ECAs and pointed to the statement in the Technical
Explanation that reasonable efforts include certain actions before
``reporting to credit rating agencies is initiated.'' Technical
Explanation, at 82. In addition, several commenters suggested that the
express approval of a hospital organization's governing body should be
required before a hospital facility it operates is permitted to engage
in such actions as
[[Page 38156]]
wage garnishment, freezing bank accounts, or placing liens on patients'
homes or cars.
The proposed regulations state that ECAs include any actions taken
by a hospital facility against an individual related to obtaining
payment of a bill for care covered under the hospital facility's FAP
that require a legal or judicial process. ECAs that require a legal or
judicial process include, but are not limited to, actions to--
Place a lien on an individual's property;
Foreclose on an individual's real property;
Attach or seize an individual's bank account or any other
personal property;
Commence a civil action against an individual;
Cause an individual's arrest;
Cause an individual to be subject to a writ of body
attachment; and
Garnish an individual's wages.
In addition, the Treasury Department and the IRS understand that
the reporting of adverse information about an individual to consumer
credit reporting agencies or credit bureaus is a part of the process of
obtaining payment of a hospital bill that can cause significant
financial harm to an individual for many years. Reporting to credit
agencies is also an activity that is restricted in some state laws
governing debt collection by hospitals. The proposed regulations
provide that ECAs include reporting to credit agencies.
The final action listed in the proposed regulations as an ECA is
the sale of an individual's debt to another party. A number of
commenters suggested that the proposed regulations prohibit the sale of
debt altogether. Such a prohibition is contained in at least one state
law governing debt collection by hospitals. The proposed regulations
provide that the sale of debt is an ECA because the Treasury Department
and the IRS understand that after a hospital facility has sold a debt,
it may have a more limited ability to control the purchaser's actions
to collect the debt. By contrast, when a hospital facility refers an
individual's debt to a debt collection agent or other party without
selling the debt (for example, by entering into a contract under which
the other party conducts all of the facility's billing and collections
activities pursuant to the hospital facility's billing and collections
policy), a hospital facility can presumably maintain greater control
over its third party agent. As a result, the proposed regulations do
not define ECAs to include referring an individual's debt without
selling it. The Treasury Department and the IRS request comments
regarding whether a hospital facility can maintain sufficient control
over the collection actions of parties to which it refers or sells debt
and whether either referring debt or selling debt (or both) should
constitute ECAs.
The proposed regulations do not define ECAs to include deferring or
denying care based on a pattern of nonpayment, requiring deposits
before providing care, or charging interest, although policies allowing
certain of these actions may not satisfy the emergency medical care
policy provision noted in section 4.b of this preamble. In addition,
the Treasury Department and the IRS understand that some state laws
restrict the degree to which hospitals can engage in these activities
and request additional comments on whether such activities should
constitute ECAs.
The proposed regulations also do not require a hospital facility to
obtain governing body approval before engaging in ECAs. Comments are
requested regarding what additional procedural protections, if any, may
be appropriate as a part of the reasonable efforts to determine FAP-
eligibility that a hospital facility must make before engaging in ECAs,
discussed in the immediately following section 6.b of this preamble.
b. Reasonable Efforts
In discussing the scope of the term ``reasonable efforts,'' many
commenters pointed to the JCT's statement in the Technical Explanation
that reasonable efforts were intended to include ``notification by the
hospital of its FAP upon admission and in written and oral
communications with the patient regarding the patient's bill, including
invoices and telephone calls.'' Technical Explanation, at 82. A few
commenters recommended that providing one written summary of a FAP in
at least one invoice mailed or otherwise provided to an individual
following the provision of hospital services and prior to referring the
account to a collection agency should be deemed to constitute
``reasonable efforts'' to determine the individual's FAP-eligibility.
Other commenters recommended that a hospital facility be required to
provide at least three notices about the FAP (as well as contact
information to request additional information) and wait at least 120
days from the first notice or billing statement before engaging in
ECAs. One commenter noted that hospitals have traditionally handled
their receivables internally and then turned them over to collections
agencies after 120 days. Several commenters suggested that individuals
be given more than 120 days, such as one year, to apply for financial
assistance.
The proposed regulations provide that, with respect to any care
provided by a hospital facility to an individual, the hospital facility
will have made reasonable efforts to determine whether the individual
is FAP-eligible if the hospital facility: (1) Notifies the individual
about the FAP; (2) in the case of an individual who submits an
incomplete FAP application, provides the individual with information
relevant to completing the FAP application; and (3) in the case of an
individual who submits a complete FAP application, makes and documents
a determination as to whether the individual is FAP-eligible (and meets
certain other specified requirements described later in this preamble).
For purposes of meeting these requirements, the proposed
regulations describe both a ``notification period'' and an
``application period.'' The notification period is the period during
which the hospital facility must notify an individual about the FAP.
Under the proposed regulations, this period begins on the date care is
provided to the individual and ends on the 120th day after the hospital
facility provides the individual with the first billing statement for
the care. If a hospital facility has met all of the notification
requirements and the individual has failed to submit a FAP application
by the end of the notification period, the hospital facility may engage
in ECAs against the individual. However, a hospital facility must
accept and process FAP applications submitted by an individual during a
longer ``application period'' that ends on the 240th day after the
hospital facility provides the individual with the first billing
statement for the care. The Treasury Department and the IRS have
proposed including both a shorter notification period and a longer
application period as a way of balancing the individual's need for
sufficient time to seek financial assistance with the hospital
facility's interest in efficiently carrying out its billing processes.
The Treasury Department and the IRS request comments regarding other
possible ways to achieve this balance.
The Treasury Department and the IRS are proposing a notification
period of 120 days from the first billing statement because a few
commenters suggested that hospital billing cycles are typically 45 days
and the Treasury Department and the IRS intend that individuals will
receive notice about the FAP with at least three billing statements and
then have at least 30 days after the third
[[Page 38157]]
billing statement to apply for financial assistance before ECAs are
initiated. In addition, a 120-day notification period was selected
because hospitals are used to dealing with a 120-day period in the
context of deeming debts to be bad debts under the Medicare program and
because such a period is consistent with some state requirements or
recommendations to wait 120 days before taking such collection actions
as commencing lawsuits, reporting to credit agencies, or referring to
collection agencies. Similarly, a 240-day period to apply for financial
assistance is roughly in the middle of the range of application periods
required under various state laws and recommended by some commenters.
The Treasury Department and the IRS request comments regarding the
proposed lengths of the notification period and the application period
and/or whether it would be preferable to have only one concurrent
period.
Finally, the Treasury Department and the IRS recognize that some
inpatients staying at a hospital facility for a prolonged period of
time may start receiving billing statements in the mail before being
discharged. Comments are requested regarding whether the notification
and application periods for such inpatients should start on a date
later than the date of the first billing statement (such as the date of
discharge) and on the feasibility of this and other approaches to
addressing this issue.
i. Notification About the FAP
To satisfy the notification component of ``reasonable efforts''
with respect to any care provided to an individual, the proposed
regulations require a hospital facility to distribute a plain language
summary of the FAP, and offer a FAP application form, to the individual
before discharge from the hospital facility. A hospital facility must
also include a plain language summary of the FAP with all (and at least
three) billing statements for the care and all other written
communications regarding the bill provided to the individual during the
notification period. In addition, the hospital facility must inform the
individual about the FAP in all oral communications regarding the
amount due for the care that occur during the notification period.
Finally, the hospital facility must provide the individual with at
least one written notice that informs the individual about the ECAs the
hospital facility (or other authorized party) may take if the
individual does not submit a FAP application or pay the amount due by a
date (specified in the notice) that is no earlier than the last day of
the notification period. The hospital facility must provide this
written notice at least 30 days before the deadline specified in the
notice.
The proposed regulations define a ``plain language summary'' of the
FAP as a written statement that notifies an individual that the
hospital facility offers financial assistance under a FAP and also
includes the following items of information in language that is clear,
concise, and easy to understand:
A brief description of the eligibility requirements and
assistance offered under the FAP;
The direct Web site address, or URL, and physical
location(s) where the individual can obtain copies of the FAP and FAP
application form;
Instructions on how the individual can obtain a free copy
of the FAP and FAP application form by mail;
The contact information of hospital facility staff who can
provide the individual with information about the FAP and the FAP
application process, as well as of any nonprofit organizations or
government agencies the hospital facility has identified as capable and
available sources of assistance with FAP applications;
A statement of the availability of translations of the
FAP, FAP application form, and plain language summary in other
languages, if applicable; and
A statement that no FAP-eligible individual will be
charged more for emergency or other medically necessary care than AGB.
The proposed regulations provide that if an individual submits a
complete or incomplete FAP application to a hospital facility during
the application period, the hospital facility will be deemed to have
met the notification requirements with respect to the individual as of
the time the FAP application is submitted. Thus, once a hospital
facility receives a FAP application from an individual, the hospital
facility no longer needs to continue notifying that individual about
the FAP. However, the submission of a FAP application form during the
application period triggers other requirements that the hospital
facility must satisfy to have made reasonable efforts to determine
whether the individual is FAP-eligible, which are discussed in the
immediately following sections 6.b.ii and 6.b.iii of this preamble.
Many commenters noted that even when a hospital facility makes
reasonable efforts to notify an individual about its FAP and FAP
application process, some individuals will decline to apply for
financial assistance under the FAP, leaving the hospital facility
without the information it needs to determine FAP-eligibility. These
commenters asked that a hospital facility not be foreclosed from
initiating ECAs when it makes reasonable efforts to notify an
individual about its FAP and the individual does not respond.
The Treasury Department and the IRS recognize that some FAP-
eligible individuals will not submit a FAP application, notwithstanding
a hospital facility's efforts to notify individuals about its FAP. As a
result, the proposed regulations provide that, with respect to any care
provided to an individual, a hospital facility has made reasonable
efforts to determine whether the individual is FAP-eligible if the
hospital facility meets, and documents that it met, the notification
component of reasonable efforts and the individual does not submit a
FAP application by the end of the notification period (or, if later,
the deadline specified by the hospital facility). Once the hospital
facility has made reasonable efforts to determine whether an individual
is FAP-eligible as a result of notifying the individual during the 120-
day notification period, it may engage in one or more ECAs against the
individual. However, even after a hospital facility is permitted to
engage in ECAs against an individual, it must still process FAP
applications submitted before the end of the application period in
order to have made reasonable efforts to determine whether the
individual is FAP-eligible, as described in the immediately following
sections 6.b.ii and 6.b.iii of this preamble.
ii. Incomplete FAP Applications
The proposed regulations provide that if an individual submits an
incomplete FAP application during the application period, a hospital
facility will have made reasonable efforts to determine whether the
individual is FAP-eligible only if it takes three steps. First, if
applicable, the hospital facility must suspend any ECAs against the
individual (meaning it does not initiate any new ECAs or take further
action with respect to previously-initiated ECAs). Second, the hospital
facility must provide the individual with a written notice that
describes the additional information and/or documentation the
individual must submit to complete his or her FAP application and
include a plain language summary of the FAP with the written notice.
Third, the hospital facility must provide the individual with at least
one written notice that informs the individual about the ECAs that the
hospital facility or other authorized party may initiate or resume if
the individual does not complete the
[[Page 38158]]
application or pay the amount due by a completion deadline (specified
in the notice) that is no earlier than the later of 30 days from the
date of the written notice or the last day of the application period.
The hospital facility must provide this written notice regarding ECAs
at least 30 days before the completion deadline.
If a hospital facility provides this required information and
suspends any ECAs against the individual, and the individual fails to
complete the FAP application by the completion deadline, the hospital
facility will have made reasonable efforts to determine whether the
individual is FAP-eligible and thus may initiate or resume ECAs against
the individual.
If the individual completes the FAP application by the completion
deadline, the proposed regulations provide that the individual will be
considered to have submitted a complete FAP application during the
application period, and thus the requirements for complete FAP
applications, discussed in the immediately following section 6.b.iii of
this preamble, apply.
The Treasury Department and IRS request comments on ways to
encourage timely completion of incomplete applications so that hospital
facilities may determine whether individuals are FAP-eligible while
still providing individuals with sufficient time to apply for financial
assistance.
iii. Complete FAP Applications
The proposed regulations provide that if a hospital facility
receives a complete FAP application from an individual during the
application period, the hospital facility will have made reasonable
efforts to determine whether the individual is FAP-eligible only if it
suspends any ECAs against the individual, makes and documents an
eligibility determination in a timely manner, and notifies the
individual in writing of the determination and the basis for the
determination. In addition, if the hospital facility has determined
that the individual is FAP-eligible, the hospital facility must take
three additional steps in a timely manner. First, it must provide the
individual with a billing statement that indicates the amount the
individual owes as a FAP-eligible individual. This billing statement
must also show--or describe how the individual can get information
regarding--the AGB for the care provided and how the hospital facility
determined the amount the individual owes as a FAP-eligible individual.
Second, the hospital facility must refund any excess payments made by
the individual. Third, the hospital facility must take all reasonably
available measures to reverse any ECA (with the exception of a sale of
debt) taken against the individual to collect the debt at issue.
Accordingly, the hospital facility generally must take measures to
vacate any judgment against the individual, lift any liens or levies on
the individual's property, and remove from the individual's credit
report any adverse information reported to a consumer reporting agency
or credit bureau.
The Treasury Department and the IRS request comments regarding the
feasibility of reversing various ECAs when the hospital facility
determines that an individual is FAP-eligible, including in
circumstances in which an individual's debt has been referred or sold
to another party.
As a general matter, once a hospital facility has taken all of the
required steps after receiving a complete FAP application, it has made
reasonable efforts to determine whether the individual is FAP-eligible
and thus may initiate or resume ECAs against the individual. However,
the proposed regulations also contain an anti-abuse rule that provides
that a hospital facility will not have made reasonable efforts to
determine whether an individual is FAP-eligible if the hospital
facility bases a determination that the individual is not FAP-eligible
on information the hospital facility has reason to believe is
unreliable or incorrect or on information obtained from the individual
under duress or through the use of coercive practices.
In addition, the proposed regulations provide that a hospital
facility has made reasonable efforts to determine whether an individual
is FAP-eligible if it determines that the individual is eligible for
the most generous assistance available under its FAP based on
information other than that provided by the individual as part of a
complete FAP application. For example, a hospital facility could make
reasonable efforts by determining that an individual is eligible for
the most generous assistance offered under its FAP based on information
establishing that the individual is eligible for assistance under one
or more means-tested public programs.
The Treasury Department and the IRS seek comments on how to provide
additional flexibility under the regulations to hospital facilities
seeking to determine whether an individual is FAP-eligible so that the
procedural protections provided under section 501(r)(6) are respected
but do not unnecessarily interfere with a hospital facility's
reasonable financial management. Comments are requested on how a
hospital facility might reasonably determine whether an individual is
FAP-eligible in ways other than soliciting and processing FAP
applications.
Specifically, the Treasury Department and the IRS understand that
many individuals who are not FAP-eligible (for example, because they
are relatively affluent and/or have adequate insurance coverage) will
never submit a complete FAP application. A hospital facility may wish
to make a FAP-eligibility determination based on reliable information
early in the billing cycle in order to avoid unwarranted interference
with its routine billing practices and to avoid the administrative
burdens of notifying these non-FAP-eligible individuals about the FAP
and tracking each individual's notification and application periods.
The Treasury Department and the IRS request comments regarding whether,
and under what circumstances, a hospital facility should be permitted
to use reliable information, other than that provided by an individual
with a complete FAP application, to make a determination that the
individual is not FAP-eligible or is eligible for assistance that is
less than the most generous assistance offered under the FAP. Comments
are also requested regarding whether a hospital facility might be able
to rely on prior FAP-eligibility determinations for a period of time to
avoid having to re-determine whether an individual is FAP-eligible
every time he or she receives care. The Treasury Department and the IRS
request comments regarding what sources of information can reliably and
accurately be used to determine FAP-eligibility and whether hospital
facilities should therefore have the flexibility to use such sources of
information rather than being limited to making determinations based
only on complete FAP applications.
iv. Agreements With Other Parties
The proposed regulations provide that if a hospital facility refers
or sells an individual's debt to another party during the application
period, the hospital facility will have made reasonable efforts to
determine whether the individual is FAP-eligible only if it first
obtains (and, to the extent applicable, enforces) a legally binding
written agreement from the other party to abide by certain
requirements. First, a party to which the individual's debt is referred
during the notification period must agree to refrain from engaging in
ECAs against the individual until the hospital facility has made
reasonable
[[Page 38159]]
efforts to determine whether the individual is FAP-eligible.
Second, if the individual submits a FAP application during the
application period, the party must suspend any ECAs against the
individual until the hospital facility has made reasonable efforts to
determine whether the individual is FAP-eligible.
Third, if the individual submits a FAP application during the
application period and the hospital facility determines that the
individual is FAP-eligible, the party must adhere to procedures
specified in the agreement that ensure that the FAP-eligible individual
does not pay, and will have no obligation to pay, the party and
hospital facility together more than he or she is required to pay as a
FAP-eligible individual. If the party, rather than the hospital
facility, has the authority to do so, the party must also take all
reasonably available measures to reverse any ECA (with the exception of
a sale of debt) taken against the individual to collect the debt at
issue.
Fourth, if the party refers or sells the debt to yet another party
during the application period, the party must obtain a written
agreement from the other party to abide by the three previously-
mentioned requirements.
The Treasury Department and the IRS request comments regarding the
feasibility of a hospital facility imposing these requirements on the
parties to which it sells or refers debt by means of a written
agreement. In particular, comments are requested regarding how the
regulations should balance the need to ensure that hospital facilities
satisfy the requirements of section 501(r)(6) with the goal of avoiding
unnecessary disruptions and inefficiencies in their billing processes.
v. Miscellaneous Issues
In order to ensure that individuals have sufficient opportunity to
consider whether they might be eligible for assistance under the
hospital facility's FAP, the proposed regulations also provide that a
hospital facility will not have made reasonable efforts to determine
whether an individual is FAP-eligible simply because it obtains a
signed waiver from the individual. Thus, a signed statement that the
individual does not wish to apply for assistance under the FAP or to
receive certain notifications about the FAP will not constitute a
determination of FAP-eligibility or satisfy the requirement to make
reasonable efforts to determine FAP-eligibility before engaging in ECAs
against the individual.
Finally, the proposed regulations provide that a hospital facility
may print any written notice or communication described in this section
6 of the preamble, including any plain language summary of the FAP, on
a billing statement or along with other descriptive or explanatory
matter, as long as the required information is conspicuously placed and
of sufficient size to be clearly readable.
Effective/Applicability Dates
Consistent with the statutory effective date, the proposed
regulations provide that, except for the requirements of section
501(r)(3), section 501(r) applies to taxable years beginning after
March 23, 2010. The requirements of section 501(r)(3) apply to taxable
years beginning after March 23, 2012.
The regulations under section 501(r)(4) through 501(r)(6) are
proposed to apply for taxable years beginning on or after the date
these rules are published in the Federal Register as final or temporary
regulations. Taxpayers may rely on these proposed regulations until
final or temporary regulations are issued. The Treasury Department and
the IRS invite comments on whether, and what type of, transitional
relief may be necessary.
Availability of IRS Documents
IRS notices, revenue rulings, and revenue procedures cited in this
preamble are made available by the Superintendent of Documents, U.S.
Government Printing Office, Washington, DC 20402.
Special Analyses
It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in Executive Order
12866, as supplemented by Executive Order 13563. Therefore, a
regulatory assessment is not required. It has also been determined that
section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5)
does not apply to this proposed regulation. It is hereby certified that
these regulations will not have a significant economic impact on a
substantial number of small entities. This certification is based on
the fact that the regulations are consistent with the requirements
imposed by statute and that the collection of information in the
regulation that is subject to the Regulatory Flexibility Act will
impose a minimal burden upon the affected organizations. Consistent
with the statute, the regulations require hospital facilities to
establish two written policies--a financial assistance policy (FAP) and
an emergency medical care policy--but much of the work involved in
putting such policies into writing need only be performed once.
Moreover, while hospital facilities may need to periodically modify
these policies to reflect changed circumstances, the proposed
regulations attempt to minimize that ongoing burden by giving hospital
facilities the option of providing certain information separately from
the policy, as long as the policy explains how members of the public
can readily obtain this information free of charge. In addition, as a
general matter, the regulations describing how a hospital facility
makes reasonable efforts to determine eligibility for assistance under
its FAP and widely publicizes its FAP are designed to ensure that a
hospital facility can meet these requirements by providing basic
information about its FAP using pre-existing processes (such as the
issuance of billing statements) and resources (such as its Web site and
physician networks) in providing this information. Thus, the collection
of information in this regulation that is subject to the Regulatory
Flexibility Act will not impose a significant economic burden upon the
affected organizations. Accordingly, a Regulatory Flexibility Analysis
under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not
required. Pursuant to section 7805(f) of the Code, this regulation has
been submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on its impact on small entities.
Comments and Requests for Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any comments that are submitted timely
to the IRS as prescribed in this preamble under the ``Addresses''
heading. The Treasury Department and the IRS request comments on all
aspects of the proposed rules. All comments will be available at
www.regulations.gov or upon request.
A public hearing will be scheduled if requested in writing by any
person that timely submits written comments. If a public hearing is
scheduled, notice of the date, time, and place for the public hearing
will be published in the Federal Register.
Drafting Information
The principal authors of these proposed regulations are Preston J.
Quesenberry and Amber L. Mackenzie, Office of the Chief Counsel (Tax-
Exempt and Government Entities). However, other personnel from the
Treasury Department and the IRS participated in their development.
[[Page 38160]]
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.501(r)-0 is added to read as follows:
Sec. 1.501(r)-0 Outline of regulations.
This section lists the table of contents for Sec. Sec. 1.501(r)-1
through 1.501(r)-7.
Sec. 1.501(r)-1 Definitions
(a) Application.
(b) Definitions.
(1) Amounts generally billed (AGB).
(2) AGB percentage.
(3) Application period.
(4) Billing and collections policy.
(5) Completion deadline.
(6) Disregarded entity.
(7) Emergency medical care.
(8) Emergency medical conditions.
(9) Extraordinary collection action (ECA).
(10) Financial assistance policy (FAP).
(11) FAP application.
(12) FAP application form.
(13) FAP-eligible individual.
(14) Gross charges.
(15) Hospital facility.
(16) Hospital organization.
(17) Medicare fee-for-service.
(18) Notification period.
(19) Plain language summary.
(20) Primary payer.
(21) Private health insurer.
(22) Referring.
Sec. 1.501(r)-2 Failures to satisfy section 501(r) requirements.
[Reserved]
Sec. 1.501(r)-3 Community health needs assessments. [Reserved]
Sec. 1.501(r)-4 Financial assistance policy and emergency medical
care policy.
(a) In general.
(b) Financial assistance policy.
(1) In general.
(2) Eligibility criteria and basis for calculating amounts
charged to patients.
(3) Method for applying for financial assistance.
(4) Actions that may be taken in the event of nonpayment.
(5) Widely publicizing the FAP.
(6) Readily obtainable information.
(c) Emergency medical care policy.
(1) In general.
(2) Interference with provision of emergency medical care.
(3) Relation to federal law governing emergency care.
(4) Examples.
(d) Establishing the FAP and other policies.
(1) In general.
(2) Authorized body.
(3) Implementing a policy.
(4) Establishing a policy for more than one hospital facility.
Sec. 1.501(r)-5 Limitation on charges.
(a) In general.
(b) Amounts generally billed.
(1) Look-back method.
(2) Prospective Medicare method.
(3) Examples.
(c) Gross charges.
(d) Safe harbor for certain charges in excess of AGB.
Sec. 1.501(r)-6 Billing and collection.
(a) In general.
(b) Extraordinary collection actions.
(c) Reasonable efforts.
(1) In general.
(2) Notification.
(3) Incomplete FAP applications.
(4) Complete FAP applications.
(5) Suspending ECAs while a FAP application is pending.
(6) Waiver does not constitute reasonable efforts.
(7) Agreements with other parties.
(8) Clear and conspicuous placement.
Sec. 1.501(r)-7 Effective/applicability dates.
(a) Statutory effective/applicability date.
(1) In general.
(2) Community health needs assessment.
(b) Effective/applicability date of regulations.
Par. 3. Section 1.501(r)-1 is added to read as follows:
Sec. 1.501(r)-1 Definitions.
(a) Application. The definitions set forth in this section apply to
Sec. Sec. 1.501(r)-2 through 1.501(r)-7.
(b) Definitions--(1) Amounts generally billed (AGB) means the
amounts generally billed for emergency or other medically necessary
care to individuals who have insurance covering such care, determined
in accordance with Sec. 1.501(r)-5(b).
(2) AGB percentage means a percentage of gross charges that a
hospital facility uses under Sec. 1.501(r)-5(b)(1) to determine the
AGB for any emergency or other medically necessary care it provides to
a FAP-eligible individual.
(3) Application period means the period during which a hospital
facility must accept and process an application for assistance under
its financial assistance policy (FAP) submitted by an individual in
order to have made reasonable efforts to determine whether the
individual is FAP-eligible. With respect to any care provided by a
hospital facility to an individual, the application period begins on
the date the care is provided to the individual and ends on the 240th
day after the hospital facility provides the individual with the first
billing statement for the care.
(4) Billing and collections policy means a written policy that
includes all of the elements described in Sec. 1.501(r)-4(b)(4).
(5) Completion deadline means the date after which a hospital
facility may initiate or resume extraordinary collection actions
against an individual who has submitted an incomplete FAP application
if that individual has not provided the hospital facility with the
missing information and/or documentation necessary to complete the
application. The completion deadline must be specified in a written
notice (as described in Sec. 1.501(r)-6(c)(3)(i)(C)) and must be no
earlier than the later of--
(i) 30 days after the hospital facility provides the individual
with this written notice; or
(ii) The last day of the application period described in paragraph
(b)(3) of this section.
(6) Disregarded entity means an entity that is generally
disregarded as separate from its owner for federal tax purposes under
Sec. 301.7701-3 of this chapter. One example of a disregarded entity
is a domestic single member limited liability company that does not
elect to be classified as an association taxable as a corporation for
federal tax purposes.
(7) Emergency medical care means care provided by a hospital
facility for emergency medical conditions.
(8) Emergency medical conditions means emergency medical conditions
as defined in section 1867 of the Social Security Act (42 U.S.C.
1395dd).
(9) Extraordinary collection action (ECA) means an action described
in Sec. 1.501(r)-6(b).
(10) Financial assistance policy (FAP) means a written policy that
meets the requirements described in Sec. 1.501(r)-4(b).
(11) FAP application means the information and accompanying
documentation that a hospital facility requires an individual to submit
to apply for financial assistance under the facility's FAP. A FAP
application is considered complete if it contains information and
documentation sufficient for the hospital facility to determine whether
the applicant is FAP-eligible and incomplete if it does not contain
such information and documentation.
(12) FAP application form means the application form (and any
accompanying instructions) that a hospital facility requires an
individual to submit as part of his or her FAP application.
(13) FAP-eligible individual means an individual eligible for
financial assistance under a hospital facility's
[[Page 38161]]
FAP, without regard to whether the individual has applied for
assistance under the FAP.
(14) Gross charges, or the chargemaster rate, means a hospital
facility's full, established price for medical care that the hospital
facility consistently and uniformly charges all patients before
applying any contractual allowances, discounts, or deductions.
(15) Hospital facility means a facility that is required by a state
to be licensed, registered, or similarly recognized as a hospital.
Except as otherwise provided in published guidance, a hospital
organization may treat multiple buildings operated under a single state
license as a single hospital facility. For purposes of this paragraph
(b)(15), the term ``state'' includes only the 50 states and the
District of Columbia and not any U.S. territory or foreign country.
References to a hospital facility taking actions include instances in
which the hospital organization operating the hospital facility takes
action through or on behalf of the hospital facility.
(16) Hospital organization means an organization recognized (or
seeking to be recognized) as described in section 501(c)(3) that
operates one or more hospital facilities, including a hospital facility
operated through a disregarded entity.
(17) Medicare fee-for-service means health insurance available
under Medicare Part A and Part B of Title XVIII of the Social Security
Act.
(18) Notification period means the period during which a hospital
facility must notify an individual about its FAP in accordance with
Sec. 1.501(r)-6(c)(2) in order to have made reasonable efforts to
determine whether the individual is FAP-eligible. With respect to any
care provided by a hospital facility to an individual, the notification
period begins on the first date care is provided to the individual and
ends on the 120th day after the hospital facility provides the
individual with the first billing statement for the care.
(19) Plain language summary means a written statement that notifies
an individual that the hospital facility offers financial assistance
under a FAP and provides the following additional information in
language that is clear, concise, and easy to understand--
(i) A brief description of the eligibility requirements and
assistance offered under the FAP;
(ii) The direct Web site address (or URL) and physical location(s)
(including a room number, if applicable) where the individual can
obtain copies of the FAP and FAP application form;
(iii) Instructions on how the individual can obtain a free copy of
the FAP and FAP application form by mail;
(iv) The contact information, including the telephone number(s) and
physical location (including a room number, if applicable), of hospital
facility staff who can provide an individual with information about the
FAP and the FAP application process, as well as of the nonprofit
organizations or government agencies, if any, that the hospital
facility has identified as available sources of assistance with FAP
applications;
(v) A statement of the availability of translations of the FAP, FAP
application form, and plain language summary in other languages, if
applicable; and
(vi) A statement that no FAP-eligible individual will be charged
more for emergency or other medically necessary care than AGB.
(20) Primary payer means a health insurer (whether a private health
insurer or a public payer such as Medicare) that pays first on a claim
for medical care (usually after a deductible has been paid by the
insured) up to the limits of the policy or program, regardless of other
insurance coverage the insured may have. Primary payers are
distinguished from secondary payers that pay second on a claim for
medical care to the extent payment has not been made by the primary
payer.
(21) Private health insurer means any organization that offers
insurance for medical care that is not a governmental unit described in
section 170(c)(1). For purposes of Sec. 1.501(r)-5(b), claims paid
under Medicare Advantage (Part C of Title XVIII of the Social Security
Act) are treated as claims paid by a private health insurer.
(22) Referring an individual's debt to a debt collection agency or
other party includes contracting with, delegating, or otherwise using
the debt collection agency or other party to collect amounts owed by
the individual to the hospital facility while still maintaining
ownership of the debt.
Par. 4. Sections 1.501(r)-2 and 1.501(r)-3 are added and reserved
to read as follows:
Sec. 1.501(r)-2 Failures to satisfy section 501(r) requirements.
[Reserved].
Sec. 1.501(r)-3 Community health needs assessments. [Reserved].
Par. 5. Sections 1.501(r)-4, 1.501(r)-5, 1.501(r)-6, and 1.501(r)-7
are added to read as follows:
Sec. 1.501(r)-4 Financial assistance policy and emergency medical
care policy.
(a) In general. A hospital organization meets the requirements of
section 501(r)(4) with respect to a hospital facility it operates if
the hospital organization establishes for that hospital facility--
(1) A written financial assistance policy (FAP) that meets the
requirements described in paragraph (b) of this section; and
(2) A written emergency medical care policy that meets the
requirements described in paragraph (c) of this section.
(b) Financial assistance policy--(1) In general. To satisfy
paragraph (a)(1) of this section, a hospital facility's FAP must apply
to all emergency and other medically necessary care provided by the
hospital facility and include--
(i) Eligibility criteria for financial assistance and whether such
assistance includes free or discounted care;
(ii) The basis for calculating amounts charged to patients;
(iii) The method for applying for financial assistance;
(iv) In the case of a hospital facility that does not have a
separate billing and collections policy, the actions that may be taken
in the event of nonpayment; and
(v) Measures to widely publicize the FAP within the community
served by the hospital facility.
(2) Eligibility criteria and basis for calculating amounts charged
to patients--(i) In general. To satisfy paragraphs (b)(1)(i) and
(b)(1)(ii) of this section, the FAP must--
(A) Specify all financial assistance available under the FAP,
including all discount(s) and free care and, if applicable, the
amount(s) (for example, gross charges) to which any discount
percentages will be applied;
(B) Specify all of the eligibility criteria that an individual must
satisfy to receive each such discount, free care, or other level of
assistance;
(C) State that following a determination of FAP-eligibility, a FAP-
eligible individual will not be charged more for emergency or other
medically necessary care than the amounts generally billed to
individuals who have insurance covering such care (AGB);
(D) Describe which method under Sec. 1.501(r)-5(b) the hospital
facility uses to determine AGB; and
(E) If the hospital facility uses the look-back method described in
Sec. 1.501(r)-5(b)(1) to determine AGB, either state the hospital
facility's AGB percentage(s) and describe how the hospital facility
calculated such percentage(s) or explain how members of the public may
readily obtain this information in writing and free of charge.
[[Page 38162]]
(ii) Examples. The following examples illustrate this paragraph
(b)(2):
Example 1. Q is a hospital facility that establishes a FAP that
provides assistance to all uninsured and underinsured individuals
whose family income is less than or equal to x% of the Federal
Poverty Level (FPL), with the level of discount for which an
individual is eligible under Q's FAP determined based upon the
individual's family income as a percentage of FPL. Q's FAP defines
the meaning of ``uninsured,'' ``underinsured,'' ``family income,''
and ``Federal Poverty Level'' and specifies that all emergency and
other medically necessary care provided by Q is covered under the
FAP. Q's FAP also states that Q determines AGB by multiplying the
gross charges for any emergency or other medically necessary care it
provides to a FAP-eligible individual by 50 percent. The FAP states,
further, that Q calculated the AGB percentage of 50 percent based on
all claims paid in full to Q by Medicare and private health insurers
and the individuals they insured over a specified 12-month period,
divided by the associated gross charges for those claims. Q's FAP
contains the following chart, specifying each discount available
under the FAP, the amounts (gross charges) to which these discounts
will be applied, and the specific eligibility criteria for each such
discount:
------------------------------------------------------------------------
Family income as % of FPL Discount off of gross charges
------------------------------------------------------------------------
>y%-x%................................... 50%.
>z%-y%................................... 75%.
<=z%..................................... Free.
------------------------------------------------------------------------
Q's FAP also contains a statement that no FAP-eligible
individual will be charged more for emergency or other medically
necessary care than AGB because Q's AGB percentage is 50 percent of
gross charges and the most a FAP-eligible individual will be charged
is 50 percent of gross charges. Q's FAP satisfies the requirements
of this paragraph (b)(2).
Example 2. R is a hospital facility that establishes a FAP that
provides assistance based on household income. R's FAP defines the
meaning of ``household income'' and specifies that all emergency and
other medically necessary care provided by R is covered under the
FAP. R's FAP contains the following chart, specifying the assistance
available under the FAP and the specific eligibility criteria for
each level of assistance offered, which R updates occasionally to
account for inflation:
------------------------------------------------------------------------
Maximum amount individual will be
Household income responsible for paying
------------------------------------------------------------------------
>$b-$a............................ 40% of gross charges, up to the
lesser of AGB or x% of annual
household income.
>$c-$b............................ 20% of gross charges, up to the
lesser of AGB or y% of annual
household income.
<=$c.............................. $0 (free).
------------------------------------------------------------------------
R's FAP contains a statement that no FAP-eligible individual
will be charged more for emergency or other medically necessary care
than AGB. R's FAP also states that R determines AGB by multiplying
the gross charges for any emergency or other medically necessary
care it provides by AGB percentages, which are based on claims paid
under Medicare. In addition, the FAP provides a web address
individuals can visit, and a telephone number they can call, if they
would like to obtain an information sheet stating R's AGB
percentages and explaining how these AGB percentages were
calculated. This information sheet, which R makes available on its
Web site and provides to any individual who requests it, states that
R's AGB percentages are 35 percent of gross charges for inpatient
care and 60 percent of gross charges for outpatient care. It also
states that these percentages were based on all claims paid to R for
emergency or other medically necessary inpatient and outpatient care
by Medicare and Medicare beneficiaries over a specified 12-month
period, divided by the associated gross charges for those claims.
R's FAP satisfies the requirements of this paragraph (b)(2).
(3) Method for applying for financial assistance--(i) In general.
To satisfy paragraph (b)(1)(iii) of this section, a hospital facility's
FAP must describe how an individual applies for financial assistance
under the FAP. In addition, either the hospital facility's FAP or FAP
application form (including accompanying instructions) must describe
the information and documentation the hospital facility may require an
individual to submit as part of his or her FAP application and provide
the contact information described in Sec. 1.501(r)-1(b)(19)(iv). The
hospital facility may not deny financial assistance under the FAP based
on an applicant's failure to provide information or documentation that
the hospital facility's FAP or FAP application form does not require an
individual to submit as part of a FAP application.
(ii) Example. The following example illustrates this paragraph
(b)(3):
Example. S is a hospital facility with a FAP that bases
eligibility solely on an individual's household income. S's FAP
provides that an individual may apply for financial assistance by
completing and submitting S's FAP application form. S's FAP also
describes how individuals can obtain copies of the FAP application
form. S's FAP application form contains lines on which the applicant
lists all items of household income received by the applicant's
household over the last three months and the names of the
applicant's household members. The instructions to S's FAP
application form tell applicants where to submit the application and
provide that an applicant must attach to his or her FAP application
form proof of household income in the form of the applicant's most
recent federal tax return, payroll check stubs from the last three
months, documentation of the applicant's qualification for certain
specified state means-tested programs, or other reliable evidence of
the applicant's earned and unearned household income. S does not
require FAP applicants to submit any information or documentation
not mentioned in the FAP application form instructions. S's FAP
application form instructions also provide the contact information
of hospital facility staff who can provide an applicant with
information about the FAP and FAP application process. S's FAP
satisfies the requirements of this paragraph (b)(3).
(4) Actions that may be taken in the event of nonpayment--(i) In
general. To satisfy paragraph (b)(1)(iv) of this section, either a
hospital facility's FAP or a separate written billing and collections
policy established by the hospital facility must describe--
(A) Any actions that the hospital facility (or other authorized
party) may take relating to obtaining payment of a bill for medical
care, including, but not limited to, any extraordinary collection
actions described in Sec. 1.501(r)-6(b);
(B) The process and time frames the hospital facility (or other
authorized party) uses in taking the actions described in paragraph
(b)(4)(i)(A) of this section, including, but not limited to, the
reasonable efforts it will make to determine whether an individual is
FAP-eligible before engaging in any extraordinary collection actions,
as described in Sec. 1.501(r)-6(c); and
(C) The office, department, committee, or other body with the final
authority or responsibility for determining that the hospital facility
has made reasonable efforts to determine whether an individual is FAP-
eligible and may therefore engage in extraordinary collection actions
against the individual.
(ii) Separate billing and collections policy. In the case of a
hospital facility that satisfies paragraph (b)(1)(iv) of this section
by establishing a separate written billing and collections policy, the
hospital facility's FAP must state that the actions the hospital
facility may take in the event of nonpayment are described in a
separate billing and collections policy and explain how members of the
public may readily obtain a free copy of this separate policy.
[[Page 38163]]
(5) Widely publicizing the FAP--(i) In general. To satisfy
paragraph (b)(1)(v) of this section, a FAP must include, or explain how
members of the public may readily obtain a free written description of,
measures taken by the hospital facility to--
(A) Make the FAP, FAP application form, and a plain language
summary of the FAP (as defined in Sec. 1.501(r)-1(b)(19)) widely
available on a Web site, as described in paragraph (b)(5)(iv) of this
section;
(B) Make paper copies of the FAP, FAP application form, and plain
language summary of the FAP available upon request and without charge,
both in public locations in the hospital facility and by mail, in
English and in the primary language of any populations with limited
proficiency in English that constitute more than 10 percent of the
residents of the community served by the hospital facility;
(C) Inform and notify visitors to the hospital facility about the
FAP through conspicuous public displays or other measures reasonably
calculated to attract visitors' attention; and
(D) Inform and notify residents of the community served by the
hospital facility about the FAP in a manner reasonably calculated to
reach those members of the community who are most likely to require
financial assistance.
(ii) Meaning of inform and notify. For purposes of paragraphs
(b)(5)(i)(C) and (b)(5)(i)(D) of this section, a measure will inform
and notify visitors to a hospital facility or residents of a community
about the hospital facility's FAP if the measure, at a minimum,
notifies the reader or listener that the hospital facility offers
financial assistance under a FAP and informs him or her about how or
where to obtain more information about the FAP.
(iii) Meaning of reasonably calculated. Whether one or more
measures to widely publicize a hospital facility's FAP are reasonably
calculated to inform and notify visitors to a hospital facility or
residents of a community about the hospital facility's FAP in the
manner described in paragraphs (b)(5)(i)(C) and (b)(5)(i)(D) of this
section will depend on all of the facts and circumstances, including
the primary language(s) spoken by the residents of the community served
by the hospital facility and other attributes of the community and the
hospital facility.
(iv) Widely available on a Web site. For purposes of paragraph
(b)(5)(i)(A) of this section, a hospital facility makes its FAP, FAP
application form, and plain language summary of the FAP widely
available on a Web site only if--
(A) The hospital facility conspicuously posts complete and current
versions of these documents in English and in the primary language of
any populations with limited proficiency in English that constitute
more than 10 percent of the residents of the community served by the
hospital facility on--
(1) The hospital facility's Web site;
(2) If the hospital facility does not have its own Web site
separate from the hospital organization that operates it, the hospital
organization's Web site; or
(3) A Web site established and maintained by another entity, but
only if the Web site of the hospital facility or hospital organization
(if the facility or organization has a Web site) provides a
conspicuously-displayed link to the web page on which the document is
posted, along with clear instructions for accessing the document on
that Web site;
(B) Any individual with access to the Internet can access,
download, view, and print a hard copy of these documents without
requiring special computer hardware or software (other than software
that is readily available to members of the public without payment of
any fee) and without payment of a fee to the hospital facility,
hospital organization, or other entity maintaining the Web site; and
(C) The hospital facility provides any individual who asks how to
access a copy of the FAP, FAP application form, or plain language
summary of the FAP online with the direct Web site address, or URL, of
the web page on which these documents are posted.
(v) Limited English proficient populations. For purposes of
paragraphs (b)(5)(i)(B) and (b)(5)(iv)(A) of this section, a hospital
facility may determine whether any language minority with limited
proficiency in English constitutes more than 10 percent of the
residents of the community served by the hospital facility based on the
latest data available from the U.S. Census Bureau or other similarly
reliable data.
(vi) Examples. The following examples illustrate this paragraph
(b)(5):
Example 1. (i) Z is a hospital facility whose FAP states that Z
will make its FAP, FAP application form, and a plain language
summary of its FAP widely available through its Web site. In
accordance with its FAP, the home page and main billing page of Z's
Web site conspicuously display the following message: ``Need help
paying your bill? You may be eligible for financial assistance.
Click here for more information.'' When readers click on the link,
they are taken to a web page that explains the various discounts
available under Z's FAP and the specific eligibility criteria for
each such discount. This web page also provides a telephone number
and room number of Z that individuals can call or visit for more
information about the FAP, as well as the name and contact
information of a few nonprofit organizations and government agencies
that Z has identified as capable and available sources of assistance
with FAP applications. In addition, the web page contains
prominently-displayed links that allow readers to download PDF files
of the FAP and the FAP application form, free of charge. Z provides
any individual who asks how to access a copy of the FAP, FAP
application form, or plain language summary of the FAP online with
the URL of this web page. Z's FAP includes measures to make the FAP
widely available on a Web site within the meaning of paragraph
(b)(5)(i)(A) of this section.
(ii) Z's FAP also states that Z will make paper copies of the
FAP, FAP application form, and plain language summary of the FAP
available upon request and without charge, both by mail and in its
billing office, admissions and registrations areas, and emergency
room, and will inform and notify visitors to the hospital facility
about the FAP in these same locations using signs and brochures. In
accordance with its FAP, Z conspicuously displays a sign in large
font regarding the FAP in its billing office, admissions and
registrations areas, and emergency room. The sign says: ``Uninsured?
Having trouble paying your hospital bill? You may be eligible for
financial assistance.'' The sign also provides the URL of the Web
page where Z's FAP and FAP application form can be accessed. In
addition, the sign provides a telephone number and room number of Z
that individuals can call or visit with questions about the FAP or
the FAP application process. Underneath each sign, Z conspicuously
displays copies of a brochure that contains all of the information
required to be included in a plain language summary of the FAP (as
defined in Sec. 1.501(r)-1(b)(19)). Z makes these brochures
available in quantities sufficient to meet visitor demand. Z also
makes paper copies of its FAP and FAP application form available
upon request and without charge in these same locations and by mail.
Z's FAP includes measures to widely publicize the FAP within the
meaning of paragraphs (b)(5)(i)(B) and (b)(5)(i)(C) of this section.
(iii) In addition, Z's FAP states that Z will inform and notify
members of the community served by the hospital facility about the
FAP through its quarterly newsletter and by distributing copies of
its FAP brochures to physicians and local nonprofit organizations
and public agencies that address the health needs of low-income
people. In accordance with its FAP, Z distributes copies of the
brochure and its FAP application form to all of its referring staff
physicians and to the community health centers serving its
community. Z also distributes copies of these documents to the local
health department and to numerous public agencies and nonprofit
organizations in its community that address the health issues and
other needs of low-income populations, in quantities
[[Page 38164]]
sufficient to meet demand. In addition, every issue of the quarterly
newsletter that Z mails to the individuals in its customer database
contains a prominently-displayed advertisement informing readers
that Z offers financial assistance and that people having trouble
paying their hospital bills may be eligible for financial
assistance. The advertisement also provides readers with the URL of
the Web page where Z's FAP and FAP application form can be accessed
and a telephone number and room number of Z that individuals can
call or visit with questions about the FAP or the FAP application
process. Z's FAP includes measures to widely publicize its FAP
within the meaning of paragraph (b)(5)(i)(D) of this section.
(iv) Because Z's FAP includes measures to widely publicize the
FAP described in paragraphs (b)(5)(i)(A), (b)(5)(i)(B),
(b)(5)(i)(C), and (b)(5)(i)(D) of this section, Z's FAP meets the
requirements of this paragraph (b)(5).
Example 2. Assume the same facts as Example 1, except that Z
serves a community in which 11 percent of the residents speak
Spanish and have limited proficiency in English. Z's FAP states that
Z will provide all of the information described in Example 1,
including the FAP itself, in both Spanish and English. In accordance
with its FAP, Z translates its FAP, FAP application form, and FAP
brochure (which constitutes a plain language summary of the FAP)
into Spanish, and displays and distributes Spanish versions of these
documents in its hospital facility and in the Spanish-speaking
portions of the community it serves, using all of the measures
described in Example 1. Moreover, the home page and main billing
page of Z's Web site conspicuously display an ``[iquest]Habla
Espa[ntilde]ol?'' link that takes readers to a Web page that
summarizes the FAP in Spanish and contains links that allow readers
to download PDF files of the Spanish versions of the FAP and FAP
application form, free of charge. Z's FAP meets the requirements of
this paragraph (b)(5) by including measures to widely publicize the
FAP within the community served by Z.
Example 3. Assume the same facts as Example 1, except that
instead of including generalized summaries of the measures Z will
take to widely publicize its FAP in the FAP itself, Z's FAP states
that a task force established by Z with control over a set budget
will meet at least annually to develop and adopt a plan to widely
publicize Z's FAP. The FAP further states that the task force will
summarize this plan in a one-page information sheet that will be
made available upon request in Z's billing office and posted on the
Web page through which Z makes its FAP and FAP application form
widely available. In year 1, the task force considers the needs of
Z's patients and the surrounding community and adopts and implements
a plan to take all of the measures described in Example 1. The task
force prepares a one-page information sheet summarizing this plan
that is made available as described in the FAP. Z's FAP meets the
requirements of this paragraph (b)(5) in year 1 by including
measures to widely publicize the FAP within the community served by
Z.
(6) Readily obtainable information. For purposes of this paragraph
(b), members of the public may readily obtain information if a hospital
facility makes the information available free of charge both on a Web
site and in writing upon request in a manner similar to that described
in paragraphs (b)(5)(i)(A) and (b)(5)(i)(B) of this section.
(c) Emergency medical care policy--(1) In general. To satisfy
paragraph (a)(2) of this section, a hospital facility must establish a
written policy that requires the hospital facility to provide, without
discrimination, care for emergency medical conditions to individuals
regardless of whether they are FAP-eligible.
(2) Interference with provision of emergency medical care. A
hospital facility's emergency medical care policy will not be described
in paragraph (c)(1) of this section unless it prohibits the hospital
facility from engaging in actions that discourage individuals from
seeking emergency medical care, such as by demanding that emergency
department patients pay before receiving treatment for emergency
medical conditions or by permitting debt collection activities in the
emergency department or in other areas of the hospital facility where
such activities could interfere with the provision, without
discrimination, of emergency medical care.
(3) Relation to federal law governing emergency medical care.
Subject to paragraph (c)(2) of this section, a hospital facility's
emergency medical care policy will be described in paragraph (c)(1) of
this section if it requires the hospital facility to provide the care
for emergency medical conditions that the hospital facility is required
to provide under Subchapter G of Chapter IV of Title 42 of the Code of
Federal Regulations (or any successor regulations).
(4) Examples. The following examples illustrate this paragraph (c):
Example 1. F is a hospital facility with a dedicated emergency
department that is subject to the Emergency Medical Treatment and
Labor Act (EMTALA) and is not a critical access hospital. F
establishes a written emergency medical care policy requiring F to
comply with EMTALA by providing medical screening examinations and
stabilizing treatment and referring or transferring an individual to
another facility, when appropriate, and to provide emergency
services in accordance with 42 CFR 482.55 (or any successor
regulation). F's emergency medical care policy also states that F
prohibits any actions that would discourage individuals from seeking
emergency medical care, such as by demanding that emergency
department patients pay before receiving treatment for emergency
medical conditions or permitting debt collection activities in the
emergency department or in other areas of the hospital facility
where such activities could interfere with the provision, without
discrimination, of emergency medical care. F's emergency medical
care policy is described in paragraph (c)(1) of this section.
Example 2. G is a rehabilitation hospital facility. G does not
have a dedicated emergency department, nor does it have specialized
capabilities that would make it appropriate to accept transfers of
individuals who need stabilizing treatment for an emergency medical
condition. G establishes a written emergency medical care policy
that addresses how it appraises emergencies, provides initial
treatment, and refers or transfers an individual to another
facility, when appropriate, in a manner that complies with 42 CFR
482.12(f)(2) (or any successor regulation). G's emergency medical
care policy also states that G prohibits any actions that would
discourage individuals from seeking emergency medical care, such as
by permitting debt collection activities in any areas of the
hospital facility where such activities could interfere with the
provision, without discrimination, of emergency medical care. G's
emergency medical care policy is described in paragraph (c)(1) of
this section.
(d) Establishing the FAP and other policies--(1) In general. A
hospital organization has established a FAP, a billing and collections
policy, or an emergency medical care policy for a hospital facility
only if an authorized body of the hospital organization has adopted the
policy for the hospital facility and the hospital facility has
implemented the policy.
(2) Authorized body. For purposes of this paragraph (d), an
authorized body of a hospital organization means--
(i) The governing body (that is, the board of directors, board of
trustees, or equivalent controlling body) of the hospital organization;
(ii) A committee of the governing body, which may be composed of
any individuals permitted under state law to serve on such a committee,
to the extent that the committee is permitted by state law to act on
behalf of the governing body;
(iii) To the extent permitted under state law, other parties
authorized by the governing body of the hospital organization to act on
its behalf; or
(iv) In the case of a hospital facility (operated by the hospital
organization) that has its own governing body and is recognized as an
entity under state law but is a disregarded entity for federal tax
purposes, the governing body of that disregarded entity (or a committee
of or other parties authorized by that governing body as described in
paragraphs (d)(2)(ii) or (d)(2)(iii) of this section).
(3) Implementing a policy. For purposes of this paragraph (d), a
[[Page 38165]]
hospital facility has implemented a policy if the hospital facility has
consistently carried out the policy.
(4) Establishing a policy for more than one hospital facility.
Although a hospital organization operating more than one hospital
facility must separately establish a FAP and emergency medical care
policy for each hospital facility it operates, such policies may
contain the same operative terms. However, different AGB percentages
and methods of determining AGB and the unique attributes of the
communities that different hospital facilities serve may require the
hospital facilities to include in their FAPs (or otherwise make
available) different information regarding AGB and different measures
to widely publicize the FAP in order to meet the requirements of
paragraphs (b)(2) and/or (b)(5) of this section.
Sec. 1.501(r)-5 Limitation on charges.
(a) In general. A hospital organization meets the requirements of
section 501(r)(5) with respect to a hospital facility it operates if
the hospital facility limits the amount charged for care it provides to
any individual who is eligible for assistance under its financial
assistance policy (FAP) to--
(1) In the case of emergency or other medically necessary care, not
more than the amounts generally billed to individuals who have
insurance covering such care (AGB), as determined under paragraph (b)
of this section; and
(2) In the case of all other medical care, less than the gross
charges for such care, as described in paragraph (c) of this section.
(b) Amounts generally billed. In order to meet the requirements of
paragraph (b)(1) of this section, a hospital facility must determine
AGB for emergency or other medically necessary care using a method
described in either paragraph (b)(1) or (b)(2) of this section. A
hospital facility may use only one of these methods to determine AGB.
After choosing a particular method, a hospital facility must continue
to use that method.
(1) Look-back method--(i) In general. A hospital facility may
determine AGB for any emergency or other medically necessary care it
provides to a FAP-eligible individual by multiplying the hospital
facility's gross charges for the care provided to the individual by one
or more percentages of gross charges (AGB percentages). The hospital
facility must calculate its AGB percentage(s) at least annually by
dividing the sum of all claims for emergency and other medically
necessary care described in either paragraph (b)(1)(i)(A) or
(b)(1)(i)(B) of this section that have been paid in full to the
hospital facility during a prior 12-month period by the sum of the
associated gross charges for those claims:
(A) Claims paid by Medicare fee-for-service as the primary payer,
including any associated portions of the claims paid by Medicare
beneficiaries in the form of co-insurance or deductibles; or
(B) Claims paid by both Medicare fee-for-service and all private
health insurers as primary payers, together with any associated
portions of these claims paid by Medicare beneficiaries or insured
individuals in the form of co-payments, co-insurance, or deductibles.
(ii) One or multiple AGB percentages. A hospital facility's AGB
percentage that is calculated using the method described in this
paragraph (b)(1) may be one average percentage of gross charges for all
emergency and other medically necessary care provided by the hospital
facility. Alternatively, a hospital facility may calculate multiple AGB
percentages for separate categories of care (such as inpatient and
outpatient care or care provided by different departments) or for
separate items or services, as long as the hospital facility calculates
AGB percentages for all emergency and other medically necessary care
provided by the hospital facility.
(iii) Start date for applying AGB percentages. For purposes of
determining AGB under this paragraph (b)(1), with respect to any AGB
percentage that a hospital facility has calculated, the hospital
facility must begin applying the AGB percentage by the 45th day after
the end of the 12-month period the hospital facility used in
calculating the AGB percentage.
(2) Prospective Medicare method. As an alternative to the method
described in paragraph (b)(1) of this section, a hospital facility may
determine AGB for any emergency or other medically necessary care
provided to a FAP-eligible individual by using the billing and coding
process the hospital facility would use if the FAP-eligible individual
were a Medicare fee-for-service beneficiary and setting AGB for the
care at the amount the hospital facility determines would be the amount
Medicare and the Medicare beneficiary together would be expected to pay
for the care.
(3) Examples. The following examples illustrate this paragraph (b):
Example 1. On January 15 of year 1, Y, a hospital facility,
generates data on all claims paid to it in full for emergency or
other medically necessary care by all private health insurers and
Medicare fee-for-service as primary payers over the immediately
preceding calendar year. Y determines that it received a total of
$360 million on these claims from the private health insurers and
Medicare and another $40 million from their insured patients and
Medicare beneficiaries in the form of deductibles, co-insurance, and
co-payments. Y's gross charges for these claims totaled $800
million. Y calculates that its AGB percentage is 50 percent of gross
charges ($400 million/$800 million x 100). Y determines AGB for any
emergency or other medically necessary care it provides to a FAP-
eligible individual between February 1 of year 1 (less than 45 days
after the end of the 12-month claim period) and January 31 of year 2
by multiplying the gross charges for the care provided to the
individual by 50%. Y has determined AGB in accordance with this
paragraph (b).
Example 2. On September 20 of year 1, X, a hospital facility,
generates data on all claims paid to it in full for emergency or
other medically necessary care by Medicare fee-for-service as the
primary payer over the 12 months ending on August 31 of year 1. X
determines that, of these claims for inpatient services, it received
a total of $80 million from Medicare and another $20 million from
Medicare beneficiaries in the form of co-insurance or deductibles.
X's gross charges for these inpatient claims totaled $250 million.
Of the claims for outpatient services, X received a total of $100
million from Medicare and another $25 million from Medicare
beneficiaries. X's gross charges for these outpatient claims totaled
$200 million. X calculates that its AGB percentage for inpatient
services is 40 percent of gross charges ($100 million/$250 million x
100) and its AGB percentage for outpatient services is 62.5 percent
of gross charges ($125 million/$200 million x 100). Between October
15 of year 1 (45 days after the end of the 12-month claim period)
and October 14 of year 2, X determines AGB for any emergency or
other medically necessary inpatient care it provides to a FAP-
eligible individual by multiplying the gross charges for the
inpatient care it provides to the individual by 40% and AGB for any
emergency or other medically necessary outpatient care it provides
to a FAP-eligible individual by multiplying the gross charges for
the outpatient care it provides to the individual by 62.5%. X has
determined AGB in accordance with this paragraph (b).
Example 3. Z is a hospital facility. Whenever Z provides
emergency or other medically necessary care to a FAP-eligible
individual, Z determines the AGB for the care by using the billing
and coding process it would use if the individual were a Medicare
fee-for-service beneficiary and setting AGB for the care at the
amount it determines Medicare and the Medicare beneficiary together
would be expected to pay for the care. Z determines AGB in
accordance with this paragraph (b).
(c) Gross charges. A hospital facility must charge a FAP-eligible
individual less than the gross charges for any medical care provided to
that individual. However, a billing statement issued to a FAP-eligible
individual for
[[Page 38166]]
medical care provided by a hospital facility may state the gross
charges for such care as the starting point to which various
contractual allowances, discounts, or deductions are applied, as long
as the actual amount the individual is expected to pay is less than the
gross charges for such care.
(d) Safe harbor for certain charges in excess of AGB. A hospital
facility will be deemed to meet the requirements of paragraph (a) of
this section, even if it charges more than AGB for emergency or other
medically necessary care (or gross charges for any medical care)
provided to a FAP-eligible individual if--
(1) The FAP-eligible individual has not submitted a complete FAP
application to the hospital facility as of the time of the charge; and
(2) The hospital facility has made and continues to make reasonable
efforts to determine whether the individual is FAP-eligible, as
described in Sec. 1.501(r)-6(c), during the applicable time periods
described in that section (including by correcting the amount charged
if the individual is subsequently found to be FAP-eligible).
Sec. 1.501(r)-6 Billing and collection.
(a) In general. A hospital organization meets the requirements of
section 501(r)(6) with respect to a hospital facility it operates if
the hospital facility does not engage in extraordinary collection
actions (ECAs), as defined in paragraph (b) of this section, against an
individual before the hospital facility has, consistent with paragraph
(c) of this section, made reasonable efforts to determine whether the
individual is eligible for assistance under its financial assistance
policy (FAP). For purposes of this section, with respect to any debt
owed by an individual for care provided by a hospital facility--
(1) ECAs against the individual include ECAs against any other
individual who has accepted or is required to accept responsibility for
the individual's hospital bills; and
(2) The hospital facility will be deemed to have engaged in an ECA
against the individual if any purchaser of the individual's debt or any
debt collection agency or other party to which the hospital facility
has referred the individual's debt has engaged in an ECA against the
individual.
(b) Extraordinary collection actions. ECAs are actions taken by a
hospital facility against an individual related to obtaining payment of
a bill for care covered under the hospital facility's FAP that require
a legal or judicial process or involve selling an individuals' debt to
another party or reporting adverse information about the individual to
consumer credit reporting agencies or credit bureaus. For purposes of
this paragraph (b), actions that require a legal or judicial process
include, but are not limited to, actions to--
(1) Place a lien on an individual's property;
(2) Foreclose on an individual's real property;
(3) Attach or seize an individual's bank account or any other
personal property;
(4) Commence a civil action against an individual;
(5) Cause an individual's arrest;
(6) Cause an individual to be subject to a writ of body attachment;
and
(7) Garnish an individual's wages.
(c) Reasonable efforts--(1) In general. With respect to any care
provided by a hospital facility to an individual, the hospital facility
will have made reasonable efforts to determine whether the individual
is FAP-eligible only if the hospital facility--
(i) Notifies the individual about its FAP during the notification
period (as defined in Sec. 1.501(r)-1(b)(18)), as described in
paragraph (c)(2) of this section;
(ii) In the case of an individual who submits an incomplete FAP
application during the application period (as defined in Sec.
1.501(r)-1(b)(3)), meets the requirements described in paragraph (c)(3)
of this section; and
(iii) In the case of an individual who submits a complete FAP
application during the application period, meets the requirements
described in paragraph (c)(4) of this section.
(2) Notification--(i) In general. Except as provided in paragraph
(c)(2)(ii) of this section, with respect to any care provided by a
hospital facility to an individual, a hospital facility will have
notified the individual about its FAP for purposes of paragraph
(c)(1)(i) of this section only if the hospital facility--
(A) Distributes a plain language summary of the FAP (as defined in
Sec. 1.501(r)-1(b)(19)) and offers a FAP application form to the
individual before discharge from the hospital facility;
(B) Includes a plain language summary of the FAP with all (and at
least three) billing statements for the care and all other written
communications regarding the bill provided to the individual during the
notification period;
(C) Informs the individual about the FAP in all oral communications
with the individual regarding the amount due for the care that occur
during the notification period; and
(D) Provides the individual with at least one written notice that--
(1) Informs the individual about the ECAs the hospital facility or
other authorized party may take if the individual does not submit a FAP
application or pay the amount due by a deadline (specified in the
notice) that is no earlier than the last day of the notification
period; and
(2) Is provided to the individual at least 30 days before the
deadline specified in the written notice.
(ii) Notification when FAP application is submitted. If an
individual submits a complete or incomplete FAP application to a
hospital facility during the application period, the hospital facility
will be deemed to have notified the individual about its FAP for
purposes of paragraph (c)(1)(i) of this section as of the day the
application is submitted. However, to have made reasonable efforts to
determine whether such an individual is FAP-eligible, the hospital
facility must meet the requirements of paragraphs (c)(3) and (c)(4) of
this section, as applicable.
(iii) When no FAP application is submitted. If an individual fails
to submit a FAP application during the notification period (or, if
later, by the deadline specified in the written notice described in
paragraph (c)(2)(i)(D) of this section) and the hospital facility has
notified (and documented that it has notified) the individual as
described in paragraph (c)(2)(i) of this section, the hospital facility
will have satisfied paragraph (c)(1)(i) of this section. Until and
unless the individual subsequently submits a FAP application during the
remainder of the application period, paragraphs (c)(1)(ii) and
(c)(1)(iii) do not apply. As a result, the hospital facility will have
made reasonable efforts to determine whether the individual is FAP-
eligible and may engage in one or more ECAs against the individual.
(iv) Example. The following example illustrates this paragraph
(c)(2):
Example. Individual A receives care from hospital facility T on
February 1 and February 2. When A is discharged from T on February
2, T gives A its FAP application form and a plain language summary
of its FAP. On March 1, April 15, and May 30, T sends A billing
statements that include a one-page insert that provides a plain
language summary of the FAP. With the May 30 billing statement, T
also includes a letter that informs A that if she does not pay the
amount owed or submit a FAP application form by June 29 (120 days
after the first billing statement was provided on March 1), T may
report A's delinquency to credit reporting agencies, seek to obtain
a judgment against A, and, if such a judgment is obtained, seek to
attach and seize A's bank account or other personal property, which
[[Page 38167]]
are the only ECAs that T (or any party to which T refers A's debt)
may take in accordance with T's billing and collections policy. T
does not have any other written or oral communications with A about
her bill before June 29. T keeps electronic records showing that it
provided a plain language summary and FAP application to A on
discharge and included the letter regarding ECAs and the plain
language summaries with the billing statements sent to A. A does not
submit a FAP application form by June 29. T has made reasonable
efforts to determine whether A is FAP-eligible, and thus may engage
in ECAs against A, as of June 30.
(3) Incomplete FAP applications--(i) In general. With respect to
any care provided by a hospital facility to an individual, if the
individual submits an incomplete FAP application during the application
period, the hospital facility will have made reasonable efforts to
determine whether the individual is FAP-eligible only if the hospital
facility--
(A) Suspends any ECAs against the individual as described in
paragraph (c)(5) of this section;
(B) Provides the individual with a written notice that describes
the additional information and/or documentation required under the FAP
or FAP application form that the individual must submit to the hospital
facility to complete his or her FAP application and includes a plain
language summary of the FAP with this notice; and
(C) Provides the individual with at least one written notice that--
(1) Informs the individual about the ECAs the hospital facility or
other authorized party may initiate or resume if the individual does
not complete the FAP application or pay the amount due by a completion
deadline (specified in the notice) that is no earlier than the later of
the last day of the application period or 30 days after the hospital
facility provides the individual with the written notice; and
(2) Is provided to the individual at least 30 days before the
completion deadline.
(ii) FAP application completed by the completion deadline. If an
individual who has submitted an incomplete FAP application during the
application period completes the FAP application by the completion
deadline, the individual will be considered to have submitted a
complete FAP application during the application period, and the
hospital facility will therefore only have made reasonable efforts to
determine whether the individual is FAP-eligible if it meets the
requirements for complete FAP applications described in paragraph
(c)(4) of this section.
(iii) FAP application not completed by the completion deadline. If
an individual who submits an incomplete FAP application to a hospital
facility during the application period fails to complete the FAP
application by the completion deadline and the hospital facility has
met the requirements described in paragraph (c)(3)(i) of this section,
the hospital facility will have made reasonable efforts to determine
whether the individual is FAP-eligible and may initiate or resume ECAs
against the individual after the completion deadline.
(iv) Examples. The following examples illustrate this paragraph
(c)(3):
Example 1. (i) Assume the same facts as the example in paragraph
(c)(2)(iv) of this section and the following additional facts: A
submits an incomplete FAP application to T on October 13, two weeks
before the last day of the application period on October 27 (240
days after the first billing statement was provided on March 1).
Eligibility for assistance under T's FAP is based solely on an
individual's family income and the instructions to T's FAP
application form require applicants to attach certain documentation
verifying family income to their application forms. The FAP
application form that A submits to T on October 13 includes all of
the required income information, but A fails to attach the required
documentation verifying her family income. After receiving A's
incomplete FAP application on October 13, T does not initiate any
new ECAs against A and does not take any further action on the ECAs
T previously initiated against A. On October 15, a member of T's
staff calls A to inform her that she failed to attach any of the
required documentation of her family income and explain what kind of
documentation A needs to submit and how she can submit it. On
October 16, T sends a letter to A explaining the kind of
documentation of family income that A must provide to T to complete
her application and informing A about the ECAs that T (or any other
authorized party) may initiate or resume against A if A does not
submit the missing documentation or pay the amount due by November
15 (30 days after October 16). T includes a plain language summary
of the FAP with the letter. T has met the requirements of this
paragraph (c)(3).
(ii) On November 15, A provides T with the missing
documentation. Because A provides the missing documentation by the
completion deadline, she has submitted a complete FAP application
during the application period. As a result, to have made reasonable
efforts to determine whether A is FAP-eligible, T must assess the
documentation to determine whether A is FAP-eligible and otherwise
meet the requirements for complete FAP applications described in
paragraph (c)(4) of this section.
Example 2. Individual B receives care from hospital facility U
on January 10. U has established a FAP that provides assistance to
all individuals whose household income is less than $y, and the
instructions to U's FAP application form specify the documentation
that applicants must provide to verify their household income. Upon
discharge, U's staff gives B a plain language summary of the FAP and
a copy of its FAP application form. On January 20, B submits a FAP
application form to U indicating that he has household income of
less than $y. The FAP application form includes all of the required
income information, but B fails to attach the required documentation
verifying household income. On February 1, U sends B the first
billing statement for the care and includes with the statement
another plain language summary of the FAP. U also includes with the
billing statement a letter informing B that the income information
he provided on his FAP application form indicates that he may be
eligible to pay only x% of the amount stated on the billing
statement if he can provide documentation that verifies his
household income. In addition, this letter describes the type of
documentation (also described in the instructions to U's FAP
application form) that B needs to provide to complete his FAP
application. By August 30, B has not provided the missing
documentation. U sends B a written notice on August 30 informing him
about the ECAs U (or any other authorized party) may initiate
against B if B does not submit the missing documentation or pay the
amount due by September 29 (240 days after the first billing
statement was provided on February 1 and the last day of the
application period). B fails to provide the missing documentation by
September 29. U has made reasonable efforts to determine whether B
is FAP-eligible, and thus many engage in ECAs against B, as of
September 30.
(4) Complete FAP applications--(i) In general. With respect to any
care provided by a hospital facility to an individual, if the
individual submits a complete FAP application during the application
period, the hospital facility will have made reasonable efforts to
determine whether the individual is FAP-eligible only if the hospital
facility does the following in a timely manner--
(A) Suspends any ECAs against the individual as described in
paragraph (c)(5) of this section;
(B) Makes and documents a determination as to whether the
individual is FAP-eligible;
(C) Notifies the individual in writing of the eligibility
determination (including, if applicable, the assistance for which the
individual is eligible) and the basis for this determination;
(D) If the hospital facility determines the individual is FAP-
eligible, does the following--
(1) Provides the individual with a billing statement that indicates
the amount the individual owes as a FAP-eligible individual and shows,
or describes how the individual can get information regarding, the AGB
for the care and how the hospital facility determined the amount the
individual owes as a FAP-eligible individual;
[[Page 38168]]
(2) If the individual has made payments to the hospital facility
(or any other party) for the care in excess of the amount he or she is
determined to owe as a FAP-eligible individual, refunds those excess
payments; and
(3) Takes all reasonably available measures to reverse any ECA
(with the exception of a sale of debt) taken against the individual to
collect the debt at issue; such reasonably available measures generally
include, but are not limited to, measures to vacate any judgment
against the individual, lift any lien or levy on the individual's
property, and remove from the individual's credit report any adverse
information that was reported to a consumer reporting agency or credit
bureau.
(ii) Determination based on complete FAP applications. If a
hospital facility has met the requirements described in paragraph
(c)(4)(i) of this section and not violated the anti-abuse rule
described in paragraph (c)(4)(iii) of this section, the hospital
facility has made reasonable efforts to determine whether the
individual is FAP-eligible and may initiate or resume ECAs against the
individual. To have made reasonable efforts to determine the FAP-
eligibility of an individual who has submitted a complete FAP
application during the application period, the hospital facility must
meet the requirements described in this paragraph (c)(4) regardless of
whether the hospital facility has previously made such reasonable
efforts under paragraphs (c)(2)(iii) or (c)(3)(iii) of this section.
(iii) Anti-abuse rule for complete FAP applications. A hospital
facility will not have made reasonable efforts to determine whether an
individual is FAP-eligible if the hospital facility bases its
determination that the individual is not FAP-eligible on information
that the hospital facility has reason to believe is unreliable or
incorrect or on information obtained from the individual under duress
or through the use of coercive practices. For purposes of this
paragraph (c)(4)(iii), a coercive practice includes delaying or denying
emergency medical care to an individual until the individual has
provided the requested information.
(iv) Presumptive eligibility permitted. A hospital facility will
have made reasonable efforts to determine whether an individual is FAP-
eligible if the hospital facility determines that the individual is
eligible for the most generous assistance (including free care)
available under the FAP based on information other than that provided
by the individual as part of a complete FAP application and the
hospital facility meets the requirements described in paragraph
(c)(4)(i) of this section.
(v) Examples. The following examples illustrate this paragraph
(c)(4):
Example 1. V is a hospital facility with a FAP under which the
specific assistance for which an individual is eligible depends
exclusively upon that individual's household income. The most
generous assistance offered for care under V's FAP is 90 percent off
of gross charges up to a maximum amount due of $1,000. On March 3,
D, an individual, receives care from V, the gross charges for which
are $500. Although D does not submit a FAP application to V, V
learns that D is eligible for certain benefits under a state program
that bases eligibility on household income. Based on this knowledge,
V determines that D is eligible under V's FAP to receive the most
generous assistance under the FAP, resulting in D owing $50 (90
percent off of the $500 in gross charges) for the March 3 care. V
documents this determination, and, on March 21, sends D a billing
statement that informs him that V determined he was eligible for the
90% discount based on his eligibility for the benefits under the
state program and the fact that his bill, after the discount, was
not more than $1,000. This billing statement indicates an amount
owed of $50, shows that V arrived at $50 by applying a 90 percent
discount to the gross charges for the care, and provides a telephone
number D can call to obtain the AGB for the care he received. V has
made reasonable efforts to determine whether D is FAP-eligible as of
March 21.
Example 2. Individual C receives care from hospital facility W
on September 1. W has established a FAP that provides assistance
only to individuals whose family income is less than or equal to x%
of the Federal Poverty Level (FPL), which, in the case of C's family
size, is $y. Upon discharge, W's staff gives C a plain language
summary of the FAP and a FAP application form and informs C that if
she needs assistance in filling out the form, W has a social worker
on staff who can assist her. C expresses interest in getting
assistance with a FAP application while she is still on site and is
directed to K, one of W's social workers. K explains the eligibility
criteria in W's FAP to C, and C realizes that to determine her
family income as a percentage of FPL she needs to look at her prior
year's tax returns. On September 20, after returning home and
obtaining the necessary information, C submits a FAP application to
W that contains all of the information and documentation required in
the FAP application form instructions. W's staff promptly examines
C's FAP application and, based on the information and documentation
therein, determines that C's family income is well in excess of $y.
On October 1, W sends C her first billing statement for the care she
received on September 1. With the billing statement, W includes a
letter informing C that she is not eligible for financial assistance
because her FAP application indicates that she has family income in
excess of x% of FPL ($y for a family the size of C's family) and W
only provides financial assistance to individuals with family income
that is less than x% of FPL. W has made reasonable efforts to
determine whether C is FAP-eligible as of October 1.
Example 3. E, an individual, receives care from P, a hospital
facility, in February. P provides E with the first billing statement
for the care on March 1. P notifies E about its FAP as described in
paragraph (c)(2)(i) of this section, but E fails to submit a FAP
application by P's specified deadline of June 30 (120 days after the
initial March 1 billing statement and the last day of the
notification period). In September, P seeks and obtains a judgment
against E, in which the court determines that E owes P $1,200 for
the care P provided and states that E has 30 days to pay this
amount. E does not pay any of the $1,200 in 30 days. By October 20,
P has seized E's bank account and obtained a total of $450 in funds
from the account. E submits a complete FAP application to P on
October 20, before the last day of the application period on October
27 (240 days after the initial March 1 billing statement). Upon
receiving this application, P does not seize any additional funds
from E's bank account and also does not initiate any additional ECAs
against E. P promptly examines the application and determines that E
is eligible under P's FAP to receive a discount that results in E
only owing $150 for the care she received. P also determines that
the AGB for the care is $500. P documents this determination, seeks
to vacate the judgment against E, lifts the levy on E's bank
account, and sends E a letter that informs her about the FAP
discount for which she is eligible and explains the basis for this
eligibility determination. P includes with this letter a check for
$300 (the $450 that P seized from E's bank account minus the $150
that E owes as a FAP-eligible individual) and a billing statement
that indicates a $300 refund, shows how P applied the FAP discount
for which E is eligible to arrive at an amount owed of $150, and
states that the AGB for the care is $500. P has made reasonable
efforts to determine whether E is FAP-eligible.
Example 4. R, a hospital facility, has established a FAP that
provides financial assistance only to individuals whose family
income is less than or equal to x% of the Federal Poverty Level
(FPL), as based on their prior year's federal tax return. Individual
L receives care from R. While L is being discharged from R, she is
approached by M, an employee of a debt collection company that has a
contract with R to handle all of R's patient billing. M asks L for
her family income information, telling L that this information is
needed to determine whether L is eligible for financial assistance.
L tells M that she does not know what her family income is and would
need to consult her tax returns to determine it. M tells L that she
can just provide a ``rough estimate'' of her family income. L states
that her family income may be around $y, an amount slightly above
the amount that would allow her to qualify for financial assistance.
M enters $y on the income line of a FAP application form with L's
name on it and marks L as not FAP-eligible. Based on M's information
collection, R determines that L is not FAP-eligible and notifies L
of this determination with her first billing
[[Page 38169]]
statement. Because M had reason to believe that the income estimate
provided by L was unreliable, R has violated the anti-abuse rule
described in paragraph (c)(4)(iii) of this section. Thus, R has not
made reasonable efforts to determine whether L is FAP-eligible.
(5) Suspending ECAs while a FAP application is pending. If an
individual submits a complete or incomplete FAP application during the
application period, the hospital facility will have made reasonable
efforts to determine whether the individual is FAP-eligible only if the
hospital facility does not initiate any ECAs, or take further action on
any previously-initiated ECAs, against the individual after receiving
the application and until either--
(i) The hospital facility has met the requirements described in
paragraph (c)(4) of this section; or
(ii) In the case of an incomplete FAP application, the completion
deadline has passed without the individual having completed the FAP
application.
(6) Waiver does not constitute reasonable efforts. For purposes of
this paragraph (c), obtaining a signed waiver from an individual, such
as a signed statement that the individual does not wish to apply for
assistance under the FAP or receive the information described in
paragraphs (c)(2) or (c)(3) of this section, will not constitute a
determination of FAP-eligibility and will not satisfy the requirement
to make reasonable efforts to determine whether the individual is FAP-
eligible before engaging in ECAs against the individual.
(7) Agreements with other parties. If a hospital facility refers or
sells an individual's debt to another party during the application
period, the hospital facility will have made reasonable efforts to
determine whether the individual is FAP-eligible only if it first
obtains (and, to the extent applicable, enforces) a legally binding
written agreement from the party that--
(i) In the case of any debt referred to the party during the
notification period, the party will refrain from engaging in ECAs
against the individual until the hospital facility has met (and
documented that it has met) the requirements necessary to have made
reasonable efforts under paragraph (c)(2)(iii), (c)(3)(iii), or
(c)(4)(ii) of this section;
(ii) If the individual submits a FAP application during the
application period, the party will suspend any ECAs against the
individual as described in paragraph (c)(5) of this section;
(iii) If the individual submits a FAP application during the
application period and the hospital facility determines the individual
to be FAP-eligible, the party will do the following in a timely
manner--
(A) Adhere to procedures specified in the agreement that ensure
that the individual does not pay, and has no obligation to pay, the
party and the hospital facility together more than he or she is
required to pay as a FAP-eligible individual; and
(B) If applicable and if the party (rather than the hospital
facility) has the authority to do so, takes all reasonably available
measures to reverse any ECA (other than the sale of a debt) taken
against the individual as described in paragraph (c)(4)(i)(D)(3) of
this section; and
(iv) If the party refers or sells the debt to yet another party
during the application period, the party will obtain a written
agreement from that other party including all of the elements described
in this paragraph (c)(7).
(8) Clear and conspicuous placement. A hospital facility may print
any written notice or communication described in this paragraph (c),
including any plain language summary of the FAP, on a billing statement
or along with other descriptive or explanatory matter, as long as the
required information is conspicuously placed and of sufficient size to
be clearly readable.
Sec. 1.501(r)-7 Effective/applicability dates.
(a) Statutory effective/applicability date--(1) In general. Except
as provided in paragraph (a)(2) of this section, section 501(r) applies
to taxable years beginning after March 23, 2010.
(2) Community health needs assessment. The requirements of section
501(r)(3) apply to taxable years beginning after March 23, 2012.
(b) Effective/applicability date of regulations. The rules of Sec.
1.501(r)-1 and Sec. Sec. 1.501(r)-4 through 1.501(r)-6 apply to
taxable years beginning on or after the date these regulations are
published as final regulations in the Federal Register.
Sarah Hall Ingram,
Acting Deputy Commissioner for Services and Enforcement.
[FR Doc. 2012-15537 Filed 6-22-12; 11:15 am]
BILLING CODE 4830-01-P